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Halftime Pt.1: How Much Longer Can Apple Defy The Odds?

Even when all else fails, it seems Apple succeeds. Once again the company wowed Wall Street, this time by selling 3 million iPads in less than 3 months.

For the bulls, Apple's results were like a beacon of hope amid a sea of negative headwinds; especially after new data suggested a recovery in housing may not happen for quite some time.

How much longer can Apple defy the odds with jaw-dropping results when there's weakness at almost every other turn?

Instant Insights with the Fast Money traders

Apple is a phenomenal fundamental story, says Joe Terranova. I love the stock but I think the trade right now is sell into strength.

I’m bullish Apple long-term, adds Jon Najarian, but I agree that Apple may have trouble considering the macro headwinds. So I’m playing it with call spreads to limit my downside risk. I own the 275 calls and I’m short the 285 calls.

My clients are still loading up on Apple, counters Steve Grasso, and they're doing it at these levels. The stock is an anomaly; it’s the coolest company out there. I think the stock could see $300. The price targets always seem excessive but then Apple hits them.

I like the Apple story too but I can’t be a buyer up here, says Brian Kelly.

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GET INTO AMAZON?

Elsewhere in tech, the traders were taking a hard look at Amazon, which announced a $70 price cut on the Kindle earlier in the week.

What’s the trade?

I stepped into Amazon, reveals Joe Terranova. This stock has clearly underperformed its peers and I see it as a play on global e-commerce. As long as the stock trades above the 200-day moving average, I’m bullish.

Buying a stock that hasn’t appreciated as much as peers is a good trading strategy, says Brian Kelly, but a long position in Amazon is a bet on the retail space and the consumer. There are a lot of headwinds in the space. You’d have to twist my arm to get excited about this stock.

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HOUSING HEADACHE: DOUBLE DIP AHEAD

Once again the fragile state of the recovery sent investors to the sidelines on Tuesday after new data suggested the housing market may be worse than feared.

New data showed home sales fell 2.2 percent month over month, that’s a far cry from expectations of a 5.5 percent gain.

Analysts had predicted a flurry of buying ahead of the June 30th homebuyers tax credit deadline, but those predictions didn’t pan out.

What must you know?

The problem in housing is that homeowners are underwater and even if they want to buy a new, less expensive house they can’t because they can’t sell the one they’re in, explains strategic investor Dennis Gartman.

As a result, I think we may be looking at a double-dip in housing, Gartman speculates. And I think the trade is shorting the smaller regional banks that have a large percentage of mortgages on their books and buying big banks that don’t.

I would stay away from consumer discretionary all together, says Joe Terranova. If you must be in the space play it with companies that cater to the low-end consumer such as Walmart .

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OUTSIDE THE STOCKS: COPPER, OIL, NATURAL GAS LOWER

Oil and metals pared gains on Tuesday after new information out of China suggested the yuan’s appreciation would be far slower than previously anticipated.

If the yuan gets stronger the cost of U.S. dollar-denominated commodities that China imports—such as oil, iron ore, copper coal and platinum— would become slightly cheaper for people and businesses based in China.

What’s the trade?

I don’t like this space, says Brian Kelly. There are a number of headwinds; I’m shortFCX as a proxy for copper.

Looking at energy commodities, I’m hearing that this could be one of the hottest summers on record since 1980 and that could be bullish for nat gas, says Joe Terranova. I think this is an opportunity to get long.

The higher nat gas goes the more it plays into coal, adds Steve Grasso. The higher nat gas goes the more bullish I get on coal.



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BP LOWER...RIG CRITICIZES MORATORIUM

Shares of BP tumbled to a 13-year low on Tuesday as shareholders continue to worry about how much BP will finally have to pay for cleaning up the worst oil spill in U.S. history.

It already has paid out $2 billion and last week agreed to a $20 billion compensation fund, although this does not cap its total liabilities.

Meanwhile, in an attempt to restore investor confidence and rehabilitate its image, BP reorganized its management of the Gulf of Mexico oil spill and confirmed that managing director Bob Dudley would be taking over the company's day-to-day response to the spill.

What’s the trade?

I don’t see BP as a value play anymore, it’s a risk arb play now, muses Herb Greenberg.

And if you want to be a risk arbitrageur, I’d buy the stock and a put to limit the downside, says Jon Najarian.

*Check out our entire interview with Greenberg. Click here and watch the video now!

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EAR TO THE WALL: OFFICE MAX

Jon Najarian has spotted unusual option action in OfficeMax.

Although there’s chatter about a potential takeover, Najarian doesn’t buy the chatter. He is, however, a buyer of the stock around $16.

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CALL THE CLOSE

Brian Kelly: I’m watching the euro/yen cross as a tell. I’m a seller into the close.
Jon Najarian: I’m a buyer into the close
Joe Terranova: Fundamentals look bullish for the ag names and soft drink names into next quarter.
Steve Grasso: I don’t think the market trades above 1116


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Trader disclosure: On June 21, 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 (IPSU), (BX), (AGU), (PFE), (TER), (GMCR), (RSX), (TER), (AXP), (KO), (KR), (COST), (AMZN), (TEVA), (BMO), (DIS), (XCO), (SWN), (GMCR), (IPI), (SU), (XOM), (RDS.A), (COP), (OXY), (V), (FXB); Terranova owns (GLD) July 120 puts; Kelly is short (GS); Kelly owns (BP) puts; Kelly owns (FCX) puts; Kelly owns (GLD); Kelly owns (GDXJ); Jon Najarian owns (MOS) and short calls; Jon Najarian owns (SCCO) and short calls; Jon Najarian owns (JEF) and short calls; Jon Najarian owns (AAPL) call spreads; Grasso owns (ASTM), (ABK), (BAC), (BGP), (C), (DYN), (JPM), (LPX), (NDAQ), (PRST)

For JoeTerranova
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 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 (DYN)
Stuart Frankel & Co and it’s partners own (GERN)
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)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Dennis Gartman
Funds Managed By Dennis Gartman Are Short Yen
Funds Managed By Dennis Gartman Are Long Canadian Dollar, Australian Dollar



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