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Bullish Tailwinds Building, Has Market Turned Corner?

The S&P closed higher on Friday with investors shrugging off weak retail sales and instead focusing on a positive trend emerging in tech; the chip sector specifically.

The latest forecast from National Semiconductor showed signs of healthy future demand including demand from Europe. Meanwhile rival Texas Instruments issued a similar outlook earlier in the week citing strong demand from industrial customers.

The results soothed investor fears that the overseas crisis would drag down technology spending.

Also, big-cap pharma generated a bullish tailwind after Barclays upgraded the sector to "positive" from "neutral," citing the revenue potential of new products.

However, that’s not to say all the headwinds facing this market have died down. They haven't.

Once again investors found themselves grappling with the strength of the consumer after new data from the Commerce Department showed retail sales plunged 1.2 percent last month, the largest decline in eight months.

Should you position for a rally, or a continued sell-off?

Instant Insights with the Fast Money traders

I’m hearing that earnings are looking good for the second quarter, reveals veteran trader Gary Kaminsky. If we don’t get a lot of warnings next week I think Wall Street will take it as an ‘all clear’ sign.

Between now and the end of June if we don’t see a bunch of warnings, I think money managers could push the market higher.

Perhaps short term, but longer term we're likely heading lower, explains Jeremy Zirin, UBS Wealth Management Research Chief Equity Strategist . The recent spike in volatility we've experienced recently is a pretty rare event, In fact, the Vix above 45 has only happened 3 times in the past 20 years.

And every other time it’s happened we’ve seen 20% pull back in the S&P from peak to trough. Right now we’re down 10% so it suggests to me there could be further downside, says Zirin.

I’d play it with a rotation into defensive sectors such as consumer staples, or utilities. And I think you can also look at tech and energy, Zirin counsels.

If you’re looking for a name I like Akamai, says Guy Adami. That stock should work in any tape.

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MARKET BUZZKILL: CONSUMER

As we mentioned above, the latest data from the Commerce Department disappointed the Street Friday; it showed retail sales plunged 1.2 percent last month, the largest decline in eight months.

What should you make of it?

I think it’s too soon to make a call on the consumer data, says Karen Finerman. I don’t think the consumer is dead.

In fact, many analysts caution against overreacting to Friday's report. They say it could just be a signal that we're returning to modest growth after two unusually strong months fueled by tax refunds and rebates for energy-efficient appliances.

In the space I’d play Best Buy, says Patty Edwards. They sell items that consumers really want. I also like JCrew and Nordstrom , she says.

I’d play retail with a barbell strategy, counsels Tim Seymour. I think the mid-level consumer is in trouble.



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DID BP HIT BOTTOM THIS WEEK?

Energy investors are talking about BP and whether the stock hit bottom this week. For the second consecutive day shares have closed higher amid new chatter of a dividend cut.

What should you make of it?

I think a dividend cut would give shares a pop, speculates Anthony Scaramucci on the Halftime Report. It would suggest the company is very focused on directing money to the clean up.

Friday's move was triggered by chatter of the company’s break-up value and bidders coming into the stock, counters Steve Grasso, not a dividend cut.

I wouldn’t own BP, counsels Joe Terranova. I can’t help but wonder what happens if the relief well doesn’t work.

*Watch the video for Pete Najarian’s BP bond/options play.




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Trader disclosure: On June 11, 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 (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Finerman’s firm owns (BP) calls; Finerman’s firm owns (RIG) calls; Finerman owns (RIG) calls; Finerman’s firm owns (BP) calls; Finerman’s firm owns (BP) calls; Finerman’s firm owns (JPM) calls; Finerman’s firm owns (BAC) calls; Finerman’s firm owns (GS) calls; Finerman’s firm owns (AAPL) calls; Finerman’s firm owns (HPQ) calls; Finerman’s firm owns (GOOG) calls; Finerman owns (GS) calls; Finerman owns (HPQ) calls; Pete Najarian owns (AMD) calls; Pete Najarian owns (PFE); Pete Najarian owns (MRVL) and short (MRVL) calls; Pete Najarian owns (BAC); Pete Najarian owns (HPQ); Terranova owns (IPSU), (BX), (PFE), (RSX), (UDN), (TER), (AXP), (BMO), (BBY), (DIS), (XCO), (SWN), (GLD), (AAPL), (IPI), (SU), (V), (TEVA); Terranova owns UK Pounds; Terranova owns Euros; Terranova is short the US Dollar; Grasso owns (ABK), (BAC), (BGP), (C), (DYN), (JPM), (LPX), (NDAQ)

For Guy Adami
Adami’s wife works at Merck

Patti Edwards
Edwards owns (MRK) for clients
Edwards owns (BMY) for clients
Edwards owns (RIG) for clients
Edwards owns (NE) for clients
Edwards owns (SLB) for clients
Edwards owns (HAL) for clients
Edwards owns (DO) for clients
Edwards owns (JPM) for clients
Edwards owns (BAC) for clients
Edwards owns (C) for clients
Edwards owns (WFC) for clients
Edwards owns (MS) for clients
Edwards owns (INTC) for clients
Edwards owns (TXN) for clients
Edwards owns (NVDA) for clients
Edwards owns (AAPL) for clients
Edwards owns (HPQ) for clients
Edwards owns (MSFT) for clients
Edwards owns (GOOG) for clients

For Joe Terranova
Terranova works for (VRTS)
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners owns more than 1% of (AMKR)
Virtus Investment Partners owns more than 1% of (IGE)
Virtus Investment Partners owns more than 1% of (DBV)
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 (XLY)
Virtus Investment Partners owns more than 1% of (XLI)
Virtus Investment Partners owns more than 1% of (XLU)
Virtus Investment Partners owns more than 1% of (DRYS)

For Anthony Scaramucci
Scaramucci and Skybridge Capital own (JNJ)
Scaramucci and Skybridge Capital own (ESV)
Scaramucci and Skybridge Capital own (HAS)
Scaramucci and Skybridge Capital own (JPM)
Scaramucci and Skybridge Capital own (BAC)
Scaramucci and Skybridge Capital own (C)
Scaramucci and Skybridge Capital own (GS)
Scaramucci and Skybridge Capital own (HPQ)
Scaramucci and Skybridge Capital own (DELL)
Scaramucci and Skybridge Capital own (GOOG)
Scaramucci and Skybridge Capital own (SPY)
Scaramucci and Skybridge Capital own US Dollars

For Patty Edwards
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Edwards owns (JCG) for clients
Edwards owns (COST) for clients
Edwards owns (HD) for clients
Edwards owns (MS) for clients
Edwards owns (BAC) for clients
Edwards owns (JPM for clients
Edwards owns (C) for clients

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (DHR)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HON)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (SYMC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (TRV)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (TBT)


For Jeremy Zirin
***no disclosures**

For Meredith Bandy
BMO Capital Markets collected fees for non-investment banking services from (BTU) within the last 12 months.

BMO Capital Markets collected fees for non-investment banking services from (CNX) within the last 12 months.

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