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Halftime Pt.1: Is S&P Above 1040 A Buy Signal?      

Wednesday, 7 Jul 2010 | 1:20 PM ET

Wednesday started slowly but by midday the session evolved into a broad based rally with energy and financials leading the charge. The Dow traded higher by triple digits.

But don't take the gains for granted, yesterday's triple digit move turned into an afternoon washout.

What should you be watching?

Instant Insights with the Fast Money traders

I’m not sure I’d compare yesterday’s action to today’s action. On Tuesday the Dow gained by triple digits early and then sold-off in the afternoon, reminds Jon Najarian.

But on Wednesday stocks built into a gain by mid-session. That feels a lot better and a lot more sustainable rather than a bang on the open.

I’m watching 1040 on the S&P , reveals Patty Edwards. I want to know if that level – which was resistance – now becomes support.

However, I need to see the market close higher on the day for a couple days in a row before I can get excited, she says.

It’s also important to note that Treasuries are weaker and oil is rising, adds Joe Terranova; those are both bullish signs. Hindsight is always 20/20, but looking back at the chart of the S&P, I think 1000 is resistance on the downside.

If we close above 1040, I’d get a tad more bullish, admits Brian Kelly. But that doesn’t mean I’d cover everything and go all in long.

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TOPPING TAPE: TECH

Big cap tech names helped push the Nasdaq higher with Apple leading the charge once again.

What’s the tech trade?

I’m bullish Google, reveals Joe Terranova. The P/E is back to where it was in November and the business model is still strong. Or if you don’t like Google, I’d suggest looking at Akamai, Marvel, EMC , Adobe and/or Analog Devices.

$200 off its recent highs, I'd consider looking at Google too , adds Jon Najarian. But the stock is on its backside hard -- and around $470 I’d be a seller.

As far as I'm concerned Google is starting to look a lot like Microsoft , counters Patty Edwards and MSFT hasn’t done much over the past 10 years. I’d rather play Apple and/or Corning.

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BOEING VS. AIRBUS

The traders are keeping a close eye on Boeing which is locked in a fierce battle with Airbus in an attempt to win a $35 billion contract from the US Air Force.

Bids on the aerial refueling tankers are due by July 9, and the Pentagon is expected to name the winner in a few months.

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A recent ruling by the WTO, which finds Airbus has received illegal subsidies, led to chatter that Boeing would win the contract.

What’s the trade?

I’m bullish Boeing at current levels because they win to growing US air travel as well as the defense component, says Jon Najarian. For downstream plays I’d put suppliers Titanium Metals and ATI on the radar.

I agree that Titanium and ATI are both in play, says Brian Kelly.


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TOPPING THE TAPE: FINANCIALS

Financials were among the day’s best performers with the XLF sharply higher and regional banks seeing some of the day's biggest moves. Also, State Street notably raised its second quarter forecast.

What’s the bank trade?

Call me skeptical but I don’t want to plunge in the pool just to have the pool drained out from under me, says Patty Edwards.

As far as I’m concerned it’s not too late to short some of Europe’s banks, adds Brian Kelly. I’d consider shorting Barclays or for a broad swatch shortIXG.



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TOPPING THE TAPE: CONSUMER SHARES

Despite disappointing guidance from Family Dollar on Wednesday morning, buyers pushed retail stocks higher ahead of Thursday’s same store sales figures.

What’s the trade?

On Wall Street, FDO has been a proxy for Walmart, says Brian Kelly.

I think Family Dollar has done everything right and on a pullback, it may present an opportunity. Walmart is a horse of a different color.

In the space, I’m a buyer of CVS, says Joe Terranova. I see it as a valuation story and think it’s attractive as a pullback.


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Trader disclosure: On July 7, 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 Is Short (GS); Jon Najarian Owns (JPM) Call Spreads; Jon Najarian Owns (GS) Call Spreads; Jon Najarian Owns (AAPL) Call Spreads; Jon Najarian Owns (BP) Call Spreads; Jon Najarian Owns (MSFT); Terranova Owns (BAC), (MRVL), (MYL), (MON), (APC), (GMCR), (AXP), (TER), (XCO), (GOOG), (AMZN), (GS), (CVS), (ABT), (HES), (ADI), (ADBE), (AKAM), (EMC); Edwards Owns (GLW) For Clients; Jon Najarian Owns (BK), (PNC)

For Brian Kelly
Accounts Managed By Kanundrum Capital Are Long Euro
Accounts Managed By Kanundrum Capital Are Short British Pound
Accounts Managed By Kanundrum Capital Are Short (XLK)
Accounts Managed By Kanundrum Capital Are Short (XLI)
Accounts Managed By Kanundrum Capital Are Short (XLY)
Accounts Managed By Kanundrum Capital Are Short (RKH)
Accounts Managed By Kanundrum Capital Are Short (XLF)
Accounts Managed By Kanundrum Capital Are Short (V)
Accounts Managed By Kanundrum Capital Are Short (BCS)

For Patty Edwards
Edwards Owns (SPY) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (C) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (MS) For Clients
Edwards Owns (WFC) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (INTC) For Clients
Edwards Owns (YHOO) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (WMT) For Clients
Edwards Owns (FFIV) For Clients
Edwards Owns VIX For Clients
Edwards Owns S&P 500 For Clients
Edwards Owns Nasdaq 100 For Clients
Edwards Owns Gold For Clients
Edwards Owns Silver For Clients
Edwards Owns Platinum 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 (CASS)
Virtus Investment Partners owns more than 1% of (LDR)
Virtus Investment Partners owns more than 1% of (LPHI)
Virtus Investment Partners owns more than 1% of (MGRC)
Virtus Investment Partners owns more than 1% of (XLB)
Virtus Investment Partners owns more than 1% of (XLP)
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 (XLK)
Virtus Investment Partners owns more than 1% of (XLU)
Virtus Investment Partners owns more than 1% of (SUBK)
Virtus Investment Partners owns more than 1% of (WDFC)
Virtus Investment Partners owns more than 1% of (YDNT)
Virtus Investment Partners owns more than 1% of (DRYS)

For Bill Fleckenstein:
Fleckenstein And His Fund Own (MSFT), (VZ), Gold

Late additions
Edwards Owns (BBY) For Clients
FBR Capital Markets Has Managed Or Co-Managed A Public Offering Of (MEE), Has Received Investment Banking Compensation In Past 12 Months
FBR Capital Markets Is A Market Maker Or Liquidity Provier For (MEE)


CNBC.com with wires

  Price   Change %Change
DJIA
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NASDAQ
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S&P 500
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ADBE
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ADI
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AKAM
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ATI
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BARC
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CVS
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EMC
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FDO
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GLW
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IXG
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KRE
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MRVL
---
MSFT
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STT
---
TIU1
---
WMT
---
SPDR NRG SEL
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SPDR FIN SEL
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SPDR SPRET
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AAPL
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BA
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GOOGL
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