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Halftime Report: Too Few Bears?

According to Investors Intelligence, the percentage of bears out there has moved down to 19% sending this market into overbought territory.

Does the move imply a peak is not far off in the distance? How should you be trading now?

Strategy Session with the Fast Money Traders

I’ve been seeing overbought conditions since last June, explains Jeff Tomasulo of SMB. Yes this is a technical indicator that the broad market is overbought but I wouldn't trade that way. I would not fight the trend and the trend appears to be higher.

Options action suggests to me that the market will be sideways for the next couple of weeks, counters OptionMonster Jon Najarian. I’m seeing calls being bought on the offer and sold on the bid. That says investors are expecting sideways action and not an explosive move higher.

Despite the options action and the bearish technical indicator, I’d remain a buyer of this market, says Zach Karabell of RiverTwice. I’m focused on names I like but I'm also a long term investor.

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COMMODITIES CORNER: OIL HITS 18-MONTH HIGH

Oil prices rose more than 2 percent on Monday to their highest since October 2008, as investors grew more confident that the US is on track to emerge from the economic downturn.


What’s the trade?

At these levels, with each dollar increase in oil, I think we start to see a negative impact on consumers, says Jon Najarian. If oil pushes toward $90 it could hurt consumer stocks such as Starbucks, clothiers and other companies that rely on disposable consumer income.

If oil moves higher I think it hurts people who are already hurting, counters Zach Karabell. But I don’t think it harms the higher end. However if you’re betting on a revival of the low-end -- then higher oil could cause trouble.

If oil gets above $85 or $90 I’d think UPS and FDX will take a hit, says Jeff Tomasulo. But I’m not too worried about higher oil. Technically it’s breaking out but fundamentally we’ve have builds two weeks in a row.

In commodities I’m bullish palladium, says Tim Seymour. There’s tightness in the market. I’d play it with the Palladium ETF .

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TRADE UPDATE: ALCOA

Despite strength in commodities, Alcoa did not participate in the rally after Deutsche downgraded the company to hold from buy and slashed its price target to $18 a share from $25.

They blamed "a series of one-off business impacts" that would hurt the company's ability to capitalize on higher aluminum prices.

What’s the trade?

If aluminum breaks above $33.50 I think Alcoa goes higher, speculates Tim Seymour.

In general, any higher cost producer of a globally commoditized metal is in a tough spot, counters Zach Karabell. Alcoa is the high cost producer and I’d stay away from this name.

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APPLE SELLS 300,000 IPADS DURING FIRST DAY ON SALE

Investors are trying to figure out how to game Apple after the tech titan sold more than 300,000 iPads on Saturday, the day the product was released across the country.

“It’s going to be a game changer,” said CEO Steve Jobs.

On the news JPMorgan lifted its Apple price target to $305 while Thomas Weisel upped its target to $280.

Should you get in here?

I would not add to my position in Apple with the stock trading at $237, counsels Zach Karabell.

If you’re on the sidelines, I’d wait for the end of the month when their new 3G product is launched, counsels Jon Najarian. But I wouldn’t jump in at $237 either.

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TOPPING THE TAPE: CREE

The traders are keeping a close eye on Cree after UBS upgraded the company from “Neutral” to “Buy” with a $92 price target.

What’s the trade?

If you’re long this stock, I’d hold unless it breaks below $72.50. But if you’re not long I’d wait for a pullback.

I take this as a reminder that as the price of oil goes up, energy efficiency plays will become more attractive, says Zach Karabell.

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BIG MONEY: DEAN FOODS (DF)

OptionMonster Jon Najarian has spotted unusual options action in Dean Foods.

The volume of April 17.5 calls traded combined with LBO chatter suggests this stock could make a sharp move higher, he explains.

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TRADE TO GO: SCHLUMBERGER (SLB)

Put Schlumberger on your radar, counsels Zach Karabell. As oil goes up I think there will be increased interest in exploration. And, in the space, the stock has lagged.

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CALL THE CLOSE

Jon Najarian: I think the market goes a little higher.

Zach Karabell: I’m staying in the market long-term.

Jeff Tomasulo: Although I think the trend is higher I’m taking profits into the close.


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Trader disclosure: On Apr 5, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AA), (AAPL); Finerman's Firm Is Short (IYR), (IWM), (MDY), (SPY); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's firm Owns (TJX); Finerman's Firm Owns (WMT), (SKS); Terranova Is Short (SHLD), (EL), (CAL), (UAUA), (FDX); Terranova Is Long May 2010 Crude Oil Futures; Jon Najarian Owns (AKS) Call Spreads; Jon Najarian Owns (STLD) Call Spreads; Jon Najarian Owns (X) Call Spreads; Jon Najarian Owns (NUE) Call Spreads; Jon Najarian Owns (CREE) Call Spreads; Jon Najarian Owns (DF) Call Spreads; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (RIMM), Is Short (RIMM) Calls; Jon Najarian Owns (AAPL) Call Spreads; Jon Najarian Owns (AKS) Call Spreads; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (IGT), (IGT) Calls; Jon Najarian Owns (NUE) Call Spreads; Jon Najarian Owns (RS); Jon Najarian Owns (TJX), Is Short (TJX) Calls; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Jon Najarian Is Short (RIMM) Puts; Karabell Owns (FCX), (AAPL), (RIMM), (SLB); Edwards Owns (UUP); Edwards Owns (TM)

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