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Bull Market: Break Out Or Last Gasp?

Thursday, 11 Mar 2010 | 5:20 PM ET

On Thursday, the S&P 500 closed at a new high for the year by 1/100th of a point. Is this a breakout or the last gasp of a dying bull?

According to Pete Najarian it was more of a last gasp. Najarian as well as other traders are concerned about the catalyst behind the rally.

What must you know?

Strategy Session with the Fast Money Traders

A lot of the moves higher have been triggered by short squeezes. The Buckle is a good example; it closed higher and has a big short position. Same is true for Gymmboree. It pushed higher but it's likely short covering.

I agree that we’re seeing shorts getting caught in a squeeze, adds Steve Grasso. But as long as we hold at 1125 I think it’s safe to buy into the market.

I think the market is frothy, counters Brian Kelly. There’s plenty of time to establish a new position. I wouldn’t rush in here.

For the momentum to extend we need to see if the move higher can transition into a quality rally, says Joe Terranova. I think what we’re seeing right now is investors moving into laggards hoping they will catch up. But the quality names have to join for the gains to hold.

And I think the 'tell' could be if the market settles above 1150 on Friday, adds Terranova. Without 1150 I don't think we see the mutual fund Monday inflows.

What do you think? We want to know!

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OBAMA TRADE: WILL FINANCIAL, HEALTH CARE BILLS RAM THEIR WAY THROUGH NEXT WEEK?

With a financial reform bill making its way through Congress right alongside the health care reform bill, will the threat of new regulation drag down stocks?

What must you know?

Financial Reform

Senate Banking Committee Chairman Christopher Dodd has broken off talks with Republicans on a bipartisan bill and announced he will unveil a Democratic bill next week and bring it before the committee for debate and a vote.

Three major issues prompted the breakdown in talks -- consumer protection, shareholder rights, and derivatives regulation. They will be key to deciding the outcome, along with the actions of a handful of moderate Democrats.

Dodd is now likely to include proposals in his bill that Republicans flatly oppose, namely a powerful new watchdog for financial consumers, and new clout for investors on setting executive pay and nominating corporate directors.

Disagreement persists on regulating over-the-counter derivatives, including credit default swaps, as well.

Word on the Street
The Fast Money traders take a look at today's top business stories.

But on other topics -- such as regulating systemic risk, streamlining bank supervision, and resolving distressed financial firms -- progress has been made toward bipartisan agreement and Dodd will likely include those compromises.

How should you trade?

No matter what happens I think ending the uncertainty is enough to drive financials higher, says Daniel Clifton, of Strategas Research. I expect bank stocks to rally.

Health Care

Congressional Democrats drew closer to agreement on a broad healthcare overhaul that could lead to a final vote in the next few weeks, but vowed not to be bound by White House deadlines.

Senate Democratic leader Harry Reid told reporters there were still issues to work out in the reform package, and House of Representatives Speaker Nancy Pelosi said she was addressing the concerns "member-by-member."

But Democrats said they were close to hammering out with the White House the final changes on taxes and consumer affordability that could break months of legislative gridlock.

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TOPPING THE TAPE: VISA HITS ALL TIME HIGH

Shares of Visa hit an all time high on Thursday with investors betting that the credit card stands to benefit as the global recovery takes a foothold.

How should you play it?

I think it’s a buy and I still think it’s going higher, says Steve Grasso. I expect this stock to go to $100.

I took off my position, counters Pete Najarian. I like the company but I think the stock may be ahead of itself.

If you're looking for a bank trade I'd look at look at JPMorgan , counsels Joe Terranova.

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HOW CAN REFORM BILL NOT INCLUDE FANNIE AND FREDDIE?

If the most glaring contributions to the credit crisis came from the GSEs shouldn’t reform start with them.

CNBC’s Rick Santelli sure thinks so. In fact he’s got a lot to say on financial reform.

Curious? Watch the video now and find out for yourself.



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Trader disclosure: On March 11th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (INTC), (GS), (AGU), (BTU), (MSFT), (C), (NUE); Grasso Owns (TSO), (AAPL), (ABK), (ASTM), (BA), (BAC), (BGP), (C), (COST), (CSCO), (PFE), (PRST), (V), (WMT), (FAZ); Terranova Owns (GOOG), (AAPL), (EMC), (MSFT), (DELL), (XLE); Terranova Owns (CAL) April Puts; Terranova Is Short (XLY); Terranova Works For (VRTS); Najarian Owns (AES) Calls; Najarian Owns (BAC) Call Spread; Najarian Owns (BP); Najarian Owns (C) Calls; Najarian Owns (HOLX) Calls; Najarian Owns (MCD) Call Spread; Najarian Owns (RSH) Call Spread; Najarian Owns (YHOO) Calls; Najarian Owns (CAT) Call Spread; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (USO); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finemran's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (GOOG), (GGP), (JPM), (WFC); Finerman's Firm Owns (MCD), (OSIP), (XBI); Kellly Owns (ELC) Call; Kelly Owns (GMT) Calls; Kelly Owns (AMZN) Calls; Jon Najarian Owns (AIG), Is Short (AIG) Calls; Jon Najarian Owns (BAC), Is Short (BAC) Calls; Jon Najarian Owns (C), Is Short (C) Calls; Jon Najarian Owns (GME), Is Short (GME) Calls; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (JPM), Is Short (JPM) Calls; Jon Najarian Owns (MS), Is Short (MS) Calls; Jon Najarian Owns (WFC), Is Short (WFC) Calls; Jon Najarian Owns Seats On CBOE, CME, NYSE; Edwards Owns (ARO); Edwards Owns (BAC) For Clients; Edwards Owns (GS) For Clients; Edwards Owns (BKE) For Clients; Edwards Owns (JPM) For Clients; Edwards Owns (WFC) For Clients; Karabell Owns (C), (FXI), (JPM), (UYG); Funds Managed By Dennis Gartman Own (F), (CMG), (CGM), (DRI), (PNRA), (AGU), (PNR), (JOYG), (GOOG), (GMCR), (EWZ), (FAX), (PGH); Funds Managed By Dennis Gartman Are Short S&P Futures, (BBD), (AMX), (SPLS), (TM); Funds Managed By Dennis Gartman Are Long Canadian Dollar, Australian Dollar, Gold Futures; Funds Managed By Dennis Gartman Are Short EUR, CHF, British Pound Sterling, Yen

For Joe Terranova
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (GOK)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)

For Steve Grasso
Stuart Frankel & Co. Inc. And Its Partners Own (ABK)
Stuart Frankel & Co. Inc. And Its Partners Own (CUBA)
Stuart Frankel & Co. Inc. And Its Partners Own (GERN)
Stuart Frankel & Co. Inc. And Its Partners Own (GLG)
Stuart Frankel & Co. Inc. And Its Partners Own (HSPO)
Stuart Frankel & Co. Inc. And Its Partners Own (NWS.A)
Stuart Frankel & Co. Inc. And Its Partners Own (NXST)
Stuart Frankel & Co. Inc. And Its Partners Own (NYX)
Stuart Frankel & Co. Inc. And Its Partners Own (PDE)
Stuart Frankel & Co. Inc. And Its Partners Own (PRST)
Stuart Frankel & Co. Inc. And Its Partners Own (RDC)
Stuart Frankel & Co. Inc. And Its Partners Own (TLM)
Stuart Frankel & Co. Inc. And Its Partners Own (TOL)
Stuart Frankel & Co. Inc. And Its Partners Own (XRX)
Stuart Frankel & Co. Inc. And Its Partners Own (SDS)
Stuart Frankel & Co. Inc. And Its Partners Are Short (QQQQ)
Stuart Frankel & Co. Inc. And Its Partners Are Short (CL)

For Brian Kelly
Kanundrum Capital Owns (C)
Kanundrum Capital Owns (JPM)
Kanundrum Capital Owns (GE)
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Is Short (FCX)
Kanundrum Capital Is Short Copper
Kanundrum Capital Is Short Treasuries
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short (KRE)
Kanundrum Capital Is Short (RKH)
Kanundrum Capital Is Short (SLX)
Kanundrum Capital Is Short (X)
Kanundrum Capital Is Short (AA)
Kanundrum Capital Is Short (ACH)
Kanundrum Capital Is Short (EWH)
Kanundrum Capital Is Short (EWY)
Kanundrum Capital Is Short (AA)

For Brian Stutland
Stutland Equities Is A Market Maker In VIX Futures And Options
Stutland Equities Is A Market Maker In SPX Options

For Gerard Cassidy
RBC Capital Markets Is Providing Fulton Financial Corp. With Non-Investment Banking Securities-Related Services
RBC Capital Markets Has Provided Fulton Financial Corp. With Non-Investment Banking Securities-Related Services In The Past 12 Months
RBC Capital Markets Has Provided KeyCorp With Non-Securities Services In The Past 12 Months
RBC Capital Markets Has Provided Webster Financial Corp. With Non-Securities Services In The Past 12 Months
Royal Bank of Canada And Affiliates Owns 1% Or More Of Regions Financial Corp.
RBC Capital Markets Has Provided Huntington Bancshares With Non-Securities Services In Past 12 Months



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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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