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Halftime: Are We Pricing In A Recovery That Doesn’t Really Exist?

Friday, 9 Apr 2010 | 1:22 PM ET

The Dow pushed toward 11,000 on Friday largely buoyed by the energy bulls.

"The catalyst on the energy side primarily is that India’s Reliance took a considerable stake in nat gas company Atlas . That has the energy group flying," says Tom Schrader of Stifel Nicolaus.

But that’s not to say the market was without headwinds. The Street still remains cautious about how the financial crisis in Greece will play out. Also investors are jittery about quarterly results with earnings season kicking off next week.

Are we pricing in a recovery that doesn’t really exist?

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I think there are too many reasons not to like this rally, says Jim Iuorio of TJM. Not only do we have Greece, we've got jobless claims, and a relatively strong dollar. I think the market is overdone. Eventually I think the market turns and goes lower.

I don’t think this is a particularly bullish environment either, adds Zach Karabell of RiverTwice. There’s not a lot of volatility, or retail investors. I just don’t see conviction. That doesn’t spell bullishness in the short-term. However, longer term I do think the market goes higher.

Looking at the technicals, the S&P and crude oil have been positively correlated 89% of the time since July 2007, says Todd Gordon of Forex.com. Right now they’re both approaching key levels of resistance; 1235 in the S&P and $90 in oil. If we get those two levels at the same time we’re looking at a one two punch and I’d sell the market.

I think we may see a head fake sell-off on the back of Alcoa earnings, says Steve Grasso of Stuart Frankel. But, with forward earnings at 14 times I think there’s plenty of room to go higher.

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LOW VOLATILITY?

It appears fear is exiting the market rapidly. The Vix tumbled on Friday; it’s now down 25% for the year.

How should you play the low volatility?

I’m not a big fan of selling volatility at these levels, says Jim Iurio. But if you are look at the VXX.

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COMMODITIES AND DOLLAR

A sell off in the dollar helped commodities climb on Friday with gold and silver trading to the upside.

How should you play it?

I think gold and silver are the perfect plays, says Jim Iuorio. No matter which way you turn gold and silver look good.

I don’t love the trade, counters Zach Karabell. That’s not to say there isn’t money to be made, but I’d put money to work someplace else.

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RETURN OF REFINERS?

Investors drove shares of Chevron higher on Friday after the company said its refining and marketing arm would return to profit in the first quarter as refining margins improved. Exxon rallied in sympathy.

What’s the trade?

In this space, I like exposure to nat gas, says Steve Grasso. Chevron as well as Hess are both worth a look.

If you’re trading Exxon watching 70.15, says Todd Gordon. That’s technical resistance.

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EARNINGS LOOK AHEAD:AA

Alcoa kicks off earnings season next week and investors are cautious after JPMorgan downgraded the aluminum maker to "neutral" from "overweight" citing weak volumes and struggling margins.

What’s the trade?

Alcoa is a high cost producer in a low cost world, says Zach Karabell. We only talk about it because it reports first.

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EAR THE WALL WITH JON NAJARIAN

We talked about a possible Palm takeover earlier this week; On Friday shares are rallying again – this time with HTC the rumored buyer.

What’s the trade?

If you’re been with me on this trade at these levels, I’d take some off the table, counsels Jon Najarian.

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BUZZ KILL: STZ

Constellation Brands is our a big market buzz kill on Friday with the stock sharply lower following its earnings.

What’s the trade?

I don’t seen any reason to step in and buy, says Jim Iurio. I can see this stock trading down to $15.

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CALL THE CLOSE:

Steve Grasso: I’m a buyer of the market. I think we may see a head fake sell-off on the back of Alcoa earnings. I’d focus on financials.

Zach Karabell: I think earnings season will be very important. But I think the market goes up.

Jim Iuorio: I think the market is overdone but I’d stay long gold and silver.

Todd Gordon: I’d go long the S&P into the close.


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Trader disclosure: On April 9, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (HES), (TER), (AXP), (YHOO), (APA),; Terranova Is Short (LCC), (XLY); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM): Finerman's Firm Is Long S&P Puts: Finerman Owns (AAPL), (USO); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman's Firm Owns (CASY); Finerman's Firm And Finerman Own (JPM); Finerman's Firm And Finerman Own (BBY); Finerman's Firm And Finerman Own (WFC) Preferred; Grasso Owns (LPX), (ASTM), (ABK), (AAPL), (BAC), (BGP), (C), (CVGI), (COST), (JPM), (NEM), (PRST), (WMT), (PFE), (BA), (T); Iuorio Owns (AAPL), (WMT), (FXA), (FXC); Iuorio Owns (SPY) Calls; Iuorio Owns (QQQQ) Calls; Iuorio Owns (USO) Puts; Iuorio Owns (GLD), (GLD) calls; Iuorio Owns (FXE) Puts; Jon Najarian Owns (PALM); Jon Najarian Owns (JPM) Preferred; Jon Najarian Owns (GOOG) Put Spreads, Owns (AAPL) Call Spreads; Kelly Owns (NBG), (FRE); Karabell Owns (FCX); Seymour Owns (AAPL), (AA), (BAC), (BP), (INTC), (MSFT)

For Tim Seymour
Seygem Asset Management Owns (POT)

For JoeTerranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (XLU)
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 And Its Partners Own (LPX)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (CVGI)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)

For Brian Kelly
Kanundrum Capital Owns (MS)
Kanundrum Capital Owns (FRE)
Kanundrum Capital Owns (FNM)
Kanundrum Capital Owns (VMC)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (GOOG)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Is Long Dollar
Kanundrum Capital Is Long Treasuries
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Franc

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  Price   Change %Change
DJIA
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S&P 500
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AA
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ATLS
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CVX
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HES
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STZ
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VIX
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XOM
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IPATH 500 VIX ST FUT
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