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Halftime: Is S&P Trying To Push Above Resistance?

Stocks rallied Monday on speculation that overseas woes may not be as bad as feared.

Specifically, new data showed Europe’s industrial output surged in April, achieving the biggest year-on-year percentage gain in almost two decades.

The results sent the euro and crude oil higher; it also buoyed shares of U.S. companies that rely heavily on overseas sales.

Looking at the technicals, the desk is keeping a close eye on the S&P with the major index flirting with 1108, its 200 day moving average.

How should you be positioned now?

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If we break above the 200-day moving average technicals suggest the S&P could go to 1150, says Tim Seymour. But I’m not so sure. The volume sending the market higher has been light. I don't think the bulls can do it.

With the Vix closing under 30 I’m impressed by the action in the market, says Pete Najarian. But I expect the S&P is stuck in a range; between 1050 and somewhere slightly north of 1100. If the market trades above 1100 I'd sell into strength.

For me it's all about 1108, says Steve Grasso. Although Europe provides a positive catalyst I can't feel bullish unless we close above that level.

And don’t forget those strong economic numbers from Europe were for the month of April; largely before the worst of the turmoil. Although I agree the market may go slightly higher; big picture I’m starting to think about adding to short positions. I'd sell into the rally.

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TOPPING THE TAPE: TECH

Tech names led Monday’s gains with semis making a strong advance; also Apple pushed to the upside.

What’s the trade?

Across the space I’m looking for a bounce in semis, says Pete Najarian. They could perform into Friday.

I would not be a buyer of semis up here, counters Brian Kelly, they’ve already moved. If you’re looking for a play look at a long position in virtual storage names such as EMC. Because companies need to invest in virtual storage, there's a fundamental catalyst that should drive them higher.

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TOPPING THE TAPE: OIL

Commodity and natural resource stocks topped the tape Monday with oil trading sharply higher.

What’s the trade?

The tactical short-term play is probably a long position in names such as Hess that were sold off too sharply on the gulf disaster, says Tim Seymour. But long-term I like Chevron and Exxon as beneficiaries of the demand story.

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ENERGY MARKET BUZZKILL: BP

One name that didn’t perform well in Monday’s rally was BP. The stock traded lower after President Obama said he’d press the company to set up an escrow account to pay damage claims by individuals and businesses hurt by the oil spill in the Gulf of Mexico.

What’s the trade?

No matter how you slice it, if they talk about cutting the dividend or putting money aside for clean-up I think it’s a sell signal, muses Steve Grasso.

If you’re looking at BP, I’d look at Exxon or Chevron instead, says Pete Najarian. Or consider some plays on Canada's oil resources; check out Suncor and Penn West.

If you're playing the space, make sure to do it with major players, says Steve Grasso. If the government lifts liability caps it could be a hard hit for smaller energy companies.

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AFGHANISTAN DISCOVERY

U.S. geologists have discovered vast mineral wealth in Afghanistan, possibly amounting to $1 trillion.

What must you know?

Even if they started tomorrow with bulldozers it would take a long time to get the stuff out of the ground, explains Brian Kelly. I think it’s could make the region more volatile but I don’t see a direct trade.

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UNUSUAL ACTIVITY: CMC

Pete Najarian has spotted unusual options action in Commercial Metals.

A large volume of June 16 calls leads Najarian to speculation that this stock could make a sharp move higher.

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BEST BUY EARNINGS PREVIEW

With Best Buy earnings due Tuesday before the bell, what should you expect and how will results move the stock?

Options action looks bullish, says Pete Najarian. It suggests to me we could see positive numbers.

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CALL THE CLOSE

Brian Kelly: I’d sell into the rally.

Tim: I don’t think we break above the 200-day moving average.

Steve: I’m a seller unless we break above 1108 I’m a seller.

Pete Najarian: I’m a seller over 1100.

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Trader disclosure: On June 14, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kelly owns (BP) puts; Kelly owns (GS) puts; Kelly owns (SPY) puts; Grasso owns (ABK), (BAC), (BGP), (C), (DYN), (JPM), (LPX), (NDAQ)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (BAX)
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