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S&P Closes Below 1040; Will Stocks Whoosh Lower?

Wednesday, 30 Jun 2010 | 8:08 PM ET

Stocks ended the final day of the first half of 2010 in the red; with investors running for the exits late day, once again.

The S&P fell below the technically important 1040 level that it had held since February, generating what chartists call a "head and shoulders" pattern – a very bearish signal.

The bulls however are quick to note that the move came on a very light volume day.

What must you know about the market action?

Instant Insights from the Fast Money traders

The market held 1040 for most of the day until the end of the session, says Tim Seymour. It’s difficult for me to assess why that was; but my instinct suggests it was quarter-end selling.

I think the market sold-off late day because over the next 48 hours, there’s a lot of data coming out that could drive the market lower, explains Brian Kelly. I'm talking China PMI, retail sales in Germany, and the jobs report here in the US. Investors wanted to be out.

Leveraged short ETFs, were also cited for the late sell-off, according to Reuters, as managers piled on bets the market will fall.

Word on the Street
The Fast Money traders take a look at today's top business stories.

If you’re looking for the next important technical level, watch 1020, the October 2nd low from the fall of 2009, says Joe Terranova. How the market performs if it slides to that level should be telling.

In this environment, I’d step back and look for value. If you can own a US multi-national with a 5-6% earnings yield when the 10-year is hovering around 3% that seems cheap to me, says Anthony Scaramucci.

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HALFWAY TO HOME: WINNERS AND LOSERS

With the first half of the year drawing to a close, take a look at the biggest winners and losers over the past six months.

S&P 500 First Half Losers
Materials -13.6%
Energy -13.1%
Info. Tech -11%
Telecom -11%
Healthcare -9.7%

S&P 500 First Half Winners

Industrials -2%
Consumer Discretionary -2.2%
Consumer Staples -4.2%
Financials -4.2%

How should you trade in the second half?

I’m a buyer of energy , says Joe Terranova. Long dated future contracts are trading around $85 and I think they get to $100 by the end of the year. I'm a buyer of this weakness.

I’d look at Dupont, adds Pete Najarian. Near $34 I think it’s attractive.

In this environment, food companies look attractive to me, says Tim Seymour. I’d look at Kellogg, General Mills and even P&G. They’re healthy multi-nationals with attractive dividend yields.

Personally, I expect financials to move in the second half, speculates Anthony Scaramucci. Whether you like finreg or not, now that we have more clarity it should be good for the sector.

If you want a bullish play, buy corporate bonds, says Brian Kelly. Retail investors can do that with the LQD.

Look at Exxon Mobil, says Gary Kaminsky. There’s been accelerated selling in this name on speculation they may buy BP , but as far as I can tell that speculation is unfounded. I think you can buy Exxon and put it away.

Fast Flash: Ford
A check on Ford surging back into the green today.

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TOPPING THE TAPE: FORD

Ford topped the tape on Wednesday after it announced it will reduce its huge debt by another $4 billion as it continues to show signs of financial strength.

What’s the trade?

I like Ford based on valuations, says Tim Seymour.

Ford's has a proven management team; I like it too, adds Anthony Scaramucci.

I'd play it downstream with Johnson Controls , counsels Joe Terranova.

I'd put Tesla on the radar, says Pete Najarian. I think it's way overpriced. When they list options I'd buy the puts and go long Ford against it.

I’d look at a long position in Ford as well as Toyota and Tata because the auto story is a global story, says Patty Edwards on the Halftime Report.


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EURO IN CRISIS?

The euro gained against the dollar Wednesday due to relatively positive developments in Europe’s banking sector.

After much speculation about the need for loans, the ECB said that it would lend 131.9 billion euros to banks for three months, a day before 442 billion euros in 1-year loans comes due.

Analysts had worried that if a large number of banks subscribed to Wednesday's ECB loans, that implied weakness in European banks' ability to get funding.

The ECB said 171 institutions got three-month loans, while 1,121 institutions had received the 12-month loans a year ago.

The "relatively low demand" for new central bank loans helped bolster the euro, said Brown Brothers Harriman analysts.

What’s the trade?

Find out from Miller Tabak strategist Peter Boockvar. Watch the video now!


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Trader disclosure: On June 28, 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), (UPL), (JPM), (MS), ( C), (BAC), (GMCR); Terranova owns (GLD) 123 JULY PUTS; Terranova owns (GLD) July 120 puts; Terranova Owns (GS) Calls; Kelly owns (BP) puts; Kelly owns (FCX) puts; Kelly owns (GLD); Kelly owns (GDXJ); Kelly is short (GS); Seymour owns (AAPL), (BAC), (F), (MON); Pete Najarian owns (AKAM) call spreads; Pete Najarian owns (TEVA)

For Anthony Scaramucci
Scaramucci and SkyBridge Capital own (C)
Scaramucci and SkyBridge Capital own (F)
Scaramucci and SkyBridge Capital own (GS)
Scaramucci and SkyBridge Capital own (JPM)

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 Brian Kelly
Accounts managed by Kanundrum Capital own (AUY)
Accounts managed by Kanundrum Capital own (GFI)
Accounts managed by Kanundrum Capital own (GDX)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own Gold
Accounts managed by Kanundrum Capital own Treasuries
Accounts managed by Kanundrum Capital own US Dollars
Accounts managed by Kanundrum Capital are short British Pound
Accounts managed by Kanundrum Capital is short (AMZN)
Accounts managed by Kanundrum Capital are short (RCL)
Accounts managed by Kanundrum Capital are short (XLY)
Accounts managed by Kanundrum Capital are short (XLE)
Accounts managed by Kanundrum Capital are short (AFL)
Accounts managed by Kanundrum Capital are short (CME)
Accounts managed by Kanundrum Capital are short (EWI)
Accounts managed by Kanundrum Capital are short (EWO)
Accounts managed by Kanundrum Capital are short (GS)
Accounts managed by Kanundrum Capital are short (HIG)
Accounts managed by Kanundrum Capital are short (RKH)
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (XLI)
Accounts managed by Kanundrum Capital are short (FCX
Accounts managed by Kanundrum Capital are short (GFI)
Accounts managed by Kanundrum Capital are short (JOYG)
Accounts managed by Kanundrum Capital are short (XLB)
Accounts managed by Kanundrum Capital are short (XLK)
Accounts managed by Kanundrum Capital are short Oil
Accounts managed by Kanundrum Capital are short the S&P 500
Accounts managed by Kanundrum Capital are short the Canadian dollar
Accounts managed by Kanundrum Capital are short the Euro vs. Yen
Accounts managed by Kanundrum Capital are short the Aussie Dollar
Accounts managed by Kanundrum Capital are short (CAT)
Accounts managed by Kanundrum Capital are short (MET)
Accounts managed by Kanundrum Capital are short (WYNN)

For Whitney Tilson
Funds Managed By Tilson Own (BP)
Funds Managed By Tilson Own (MSFT)
Funds Managed By Whitney Tilson Own (BP), (XOM)

For Peter Boockvar
Boockvar owns Euros

For Ed Mills
***No Disclosures***

For Colin Gillis
***No Disclosures***

For Steven Weiss
Weiss is short (SLG)

For Mike Khouw
Cantor Fitzgerald makes a market in (APC)


CNBC.com with wires

  Price   Change %Change
S&P 500
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BP.
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DD
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F
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GILD
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JCI
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K
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ILF
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PG
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7203.T
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TSLA
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SPDR NRG SEL
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SPDR FIN SEL
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XOM
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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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