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Did Bernanke Say Glass Half Full Or Half Empty?

The Dow plunged by triple digits Wednesday, after Fed Chief Ben Bernanke rattled the markets with his semi-annual Humphrey-Hawkins testimony before the Senate.

Bears felt empowered by language Bernanke used when describing the recovery which he called "unusually uncertain." Bulls, however, argued that investors missed a slew of positives including Bernanke's repeated pledge to keep interest rates exceptionally low for an "extended period."

What should you make of it?

Instant Insights with the Fast Money traders

It seems to me that the market is extremely sensitive to economic information, muses Joe Terranova. Ben Bernanke generated some headwinds. However, if we get good jobs data or some other economic tailwinds on Thursday I expect the market to go right back up.

Fundamentally, there’s demand out of China, corporate balance sheets are solid and consumers are starting to open their wallets, he adds. Those are compelling reasons for the market to move higher.

I don’t really think Bernanke moved the market, says Guy Adami. I just don’t think his comments were equity specific enough to fully explain the magnitude of Wednesday's sell-off.

It seems to me the market is range bound, muses Pete Najarian. And the sell-off was triggered by the market move toward 1100 on the S&P. Market pros knows that’s been a level of resistance and as we approached that point, people started taking profits.

I think the market is overreacted to Bernake's comments, muses Tim Seymour. Personally, I’m starting to get long resource names, he reveals. Companies like Freeport said good things.

I sold the IWN, reveals Brian Kelly. It’s levered to small business and Bernake's talked about the need to restore the flow of credit to small business. That suggests small businesses are challenged right now.

Read More:
> Click here for complete coverage of Bernanke’s testimony
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AFTER HOURS ACTION: STARBUCKS

After the close Starbucks disappointed Wall Street with fiscal 2010 and 2011 profit forecasts that matched or lagged expectations, sending its shares lower in extended trading.

The Seattle-based chain, which has just completed a restructuring, raised its fiscal 2010 earnings target to $1.22 to $1.23 per share, from $1.19 to $1.22 per share previously. Analysts on average were looking for a profit of $1.23 for the fiscal year ending September 2010.

It now expects earnings of $1.36 to $1.41 per share in fiscal 2011, versus Wall Street's average projection of $1.41.

After slashing costs and closing failing stores, Starbucks has returned to building. It plans to add 100 net new stores in the United States and 200 internationally during this fiscal year, which ends in September. For 2011 it plans to add 500 net new stores, mostly overseas.

What’s the trade?

I’m a buyer of the weakness, says Tim Seymour.

I totally agree, says Pete Najarian. They’re growing internationally and getting into grocery stores. I see plenty of potential. And if you're looking for another stock with potential, I still like McDonald's .

> Click here for more coverage of Starbucks earnings
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AFTER HOURS ACTION: NETFLIX

After hours shares of Netflix plunged as much as 8% after the firm reported revenues that lagged expectations despite the company's beat on earnings.

Netflix, which provides online movie rental subscription services, reported second-quarter net income of $43.5 million, or 80 cents per share, compared with $32.4 million, or 54 cents per share.

Second-quarter revenue rose to $519.8 million from $408.5 million. Analysts on average had forecast the company to post earnings of 70 cents on revenue of $524.4 million, according to Thomson Reuters.

What’s the trade?

The churn was worse than expected, says Guy Adami. That’s not a good sign. I’m starting to worry about the valuations in this name.

> Click here for more coverage of Netflix earnings

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AFTER HOURS ACTION: QUALCOMM

After the bell Qualcomm reported fiscal third-quarter earnings and revenue that beat Wall Street estimates on strong smartphone demand, sending its shares up 3.4 percent after hours.

The cell phone chip maker reported a profit of 57 cents a share excluding one-time items in its fiscal third quarter, up from 54 cents a share last year.

Sales for the quarter stood at $2.7 billion, a decline from a year ago of about 2 percent.

The company was seen earning 54 cents a share on sales of $2.63 billion, according to a consensus estimate from Thomson Reuters.

What’s the trade?

I think the stock is under-owned, says Joe Terranova. And given the beat, money managers have a reason to buy.

> Click here for more coverage of Qualcomm earnings

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ANALYZE THIS: BANK EARNINGS

One day after Goldman Sachs spooked investors with a rare miss, investors heard a different story from Morgan Stanley, Wells Fargo, and US Bancorp. All three firms met or beat top line revenue estimates.

However, there was one striking similarity. Morgan Stanley joined Goldman (and other banks) in reporting that its trading revenue fell. In Morgan’s case it fell 12% to $3.35 billion.

Trading Revenues
Goldman Sachs - down 36%
JPMorgan - down 34%
Morgan Stanley – down 12%

Morgan Stanley was able to mitigate the weakness because it draws a large portion of its revenue from its retail brokerage business, unlike Goldman, which relies on institutional clients for its business.

Retail investors appear to be taking a muted approach to the market, but they’re not cutting back as sharply much as the pros.

What should you make of the results?

One quarter doesn’t a trend make, says Guy Adami. I think Goldman ratcheted down on purpose.

Looking at the money center banks, we’re seeing better credit quality improvement, says Stifel Nicolaus analyst Chris Mutascio on the Halftime Report. Consumers are stabilizing, there’s no doubt about that; consumer losses are falling. As a result banks that have consumer exposure are going to move the needle.



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Trader disclosure: On July 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; Seymour owns (AAPL), (BAC), (FCX), (GOOG), (MOS), (SBUX); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Terranova owns (EMC), (CREE), (CRCM), (LRCX), (COP), (AXP), (BMO), (CSX), (PEP), (CVS), (GS), (PCP), (C), (APA), (FCX), (JOYG), (MMM), (MOS), (GLD), (UAUA), (WYNN), (GOOG), (BBY), (SU), (KOL); Pete Najarian owns (C) calls; Pete Najarian owns (CRUS) calls; Pete Najarian owns (ISRG) call spreads; Pete Najarian owns (DD) call spreads; Pete Najarian owns (GNW) call spreads; Pete Najarian owns (V) call spreads; Pete Najarian owns (CNI) call spreads; Pete Najarian owns (TEVA) call spreads; Pete Najarian owns (PFE) call spreads; Kelly owns (BP) puts; Kelly is short (GS)

For JoeTerranova
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 Brian Kelly
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (GME)
Accounts managed by Kanundrum Capital own (BIG)
Accounts managed by Kanundrum Capital own (NWL)
Accounts managed by Kanundrum Capital own Japanese Yen
Accounts managed by Kanundrum Capital are short (BA)
Accounts managed by Kanundrum Capital are short (USO)
Accounts managed by Kanundrum Capital are short (GLD)
Accounts managed by Kanundrum Capital are short Aussie Dollar
Accounts managed by Kanundrum Capital are short (KMX)
Accounts managed by Kanundrum Capital are short (FXI)
Accounts managed by Kanundrum Capital are short (EWO)
Accounts managed by Kanundrum Capital are short (EWI)
Accounts managed by Kanundrum Capital are short (JOE)
Accounts managed by Kanundrum Capital are short (RSX)
Accounts managed by Kanundrum Capital are short (SLX)
Accounts managed by Kanundrum Capital are short (CSX)

Doug Kass
**No Disclosures**

Tim Boyd
**No Disclosures**

Mike Khouw
**No Disclosures**



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