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Halftime: Can S&P Close Above 1113, Critical Resistance?

Monday, 26 Jul 2010 | 1:23 PM ET

A pickup in new home sales combined with a brighter outlook from FedEx sent stocks higher Monday, building on the best 3-week period for the S&P in a year.

Considering the S&P closed above the key 1,100 level on Friday for the first time in a month traders are now keeping a close eye on the next key levels of resistance.

What should you be watching?

Fast Money Midday Market Check
The Fast Money traders share their market insight and midday trading advice.

Instant Insights with the Fast Money traders

I’m looking at earnings versus macro-economics, explains Brian Kelly. Corporate America is saying the world isn’t such as bad place but macro-economics says the world is slowing down. For now earnings have won and I’m net long. I expect a tradable rally but I’m not sure about the sustainability.

I think we’re facing an end of year rally, says Anthony Scaramucci. Fundamentals seem quite good and there’s $8 trillion in cash on the sidelines. My bias is higher.

I’m on the other side of Anthony’s trade, reveals Steve Grasso.

Personally I think we looking at a slide into year’s end. Technically, we’re looking at key levels and considering all the headwinds potentially strong resistance around 1113 – 1116, the 200-day. However I will say if we close above 1113 we likely go higher for a tradable rally.

I agree that the level mentioned above is critical, says Joe Terranova. If we successfully challenge 1114, I expect to see a lot of technical players join the rally as well as money managers who will become afraid to miss the next leg higher.

My ‘tell’ for a false rally is if we get above the 200-day and we don’t see Treasuries weaken, he adds. As far as I’m concerned we’ve got to see safe haven traders get shaken out of Treasuries – otherwise it’s a false rally.

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SECOND DERIVATIVE NEW HOME SALES

As we mentioned above new data showed single-family homes rebounded in June from the prior month's record low, with the percentage increase at its largest since May 1980.

What’s the play off the unexpected rise?

I’m watching Mohawk and Armstrong, says Brian Kelly. Home Depot says that flooring is selling.

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CONSUMER STOCKS RALLYING OF HOME SALES

Consumer shares also pushed higher on Monday following the strong housing numbers with the Consumer Discretionary ETF trading in the green.

However e-commerce giant Amazon drifted lower Monday, perhaps due to their recent weak earnings which showed the company was spending on the promise of future growth prospects.

What’s the consumer trade?

I expect Amazon to reamin under pressure, says Anthony Scaramucci.

I’m a buyer of Amazon around $105 - $110, says Joe Terranova.

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COPPER BREAKOUT

Looking at commodities copper , often seen as a barometer for the health of the economy, hit a new 2-month high on Monday.

What should you make of it?

Copper is one of my favorite leading indicators, says Brian Kelly. Inventories are coming down significantly and with copper flowing into China, I think the move higher in copper is sustainable.

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TOBACCO NAMES HIT NEW 52-WEEK HIGHS

Tobacco giant Reynolds America hit a new 52-week high on Monday now up 37% for the year.

What’s the trade?

It’s a good strong company with a low multiple, says Anthony Scaramucci.

My clients are long everything in this space, adds Steve Grasso. It’s considered a safe haven and it’s also a dividend play.

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TAKE YOUR POSITION: BP

BP moved significantly higher Monday as the company gets set to report earnings after the bell and speculation builds suggesting CEO Hayward may resign as soon as end of day Monday .

What’s the trade?


With a management change and the well capped, the time to wade into the stock may be now, says Anthony Scaramucci.

My trade is long Apache, says Joe Terranova, as a beneficiary of BP’s asset sale.

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CALL OF THE DAY: AT&T UPGRADED BY DEUTSCHE BANK

In Monday's call of the day, Deutsche analyst Brett Feldman upgraded AT&T to 'Buy' from ‘Hold’ and increased his price target to $31 from $30 citing attractive valuations and overblown jitters that the iPhone will soon be carried by rival Verizon.

Is he onto something? Hear more from Feldman. Watch the video now!

Spotlight on AT&T
Brett Feldman, an analyst at Deutsche Bank, tells the Fast Money traders why he upgraded AT&T.

















What’s the trade?

In the space I like Clearwire , says Brian Kelly or why not just buy Apple.

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BAIDU WATCH

The traders are keeping an eye on Baiduafter the WSJ said China's Internet search giant fielded the most mobile searches of any company in China.

What should you make of it?

Clearly Google has lost a step or two here, says Brian Kelly. Meanwhile Baidu looks like it’s breaking out.

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IS THE RETAIL INVESTOR GONE AND JUST COMPUTERS NOW?

Markets have rallied since the lows earlier this month but some analysts worry about the lack of individual investors in the market.

TradeStation's Chairman and CEO shares some valuable insights on individual investors and the impact on the markets.

Get all the details. Watch the video now.

Call to the Floor: TradeStation CEO
Salomon Sredni, CEO of the TradeStation Group, shares his insights on individual investors.






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Trader disclosure: On July 26, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Scaramucci owns (BP); Scaramucci owns (GS); Grasso owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST); Kelly owns (BP) puts; Kelly is short (GS); Terranova owns (AMZN), (EMC), (CREE), (CRCM), (LRCX), (COP), (AXP), (BMO), (CSX), (PEP), (CVS), (GS), (PCP), (C), (GLD), (APA), (FCX), (JOYG), (MMM), (MOS), (GLD), (UAUA), (WYNN), (GOOG), (BBY), (SU), (KOL)

For Anthony Scaramucci
SkyBridge Capital owns (BP)
SkyBridge Capital owns (GS)

For Steve Grasso
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (COG)
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 (IP)
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 (TBT)
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 are short (QQQQ)

For Brian Kelly
Accounts managed by Kanundrum Capital own (ELX)
Accounts managed by Kanundrum Capital own (QLGC)
Accounts managed by Kanundrum Capital own (BIG)
Accounts managed by Kanundrum Capital own (GME)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (NWL)
Accounts managed by Kanundrum Capital are short (GLD)
Accounts managed by Kanundrum Capital are short (EWO)
Accounts managed by Kanundrum Capital are short (EWI)
Accounts managed by Kanundrum Capital are short the Euro
Accounts managed by Kanundrum Capital are short the UK Pound
Accounts managed by Kanundrum Capital are short (JOE)
Accounts managed by Kanundrum Capital are short (IWM)

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 Brett Feldman
(T), (VZ) Is An Investment Banking Client Of Deutsche Bank Securities
Deutsche Bank And/Or Affiliates Has Received Non-Investment Banking Compensation From (T), (VZ) In Past Year
(T) Has Been A Client Of Deutsche Bank Securities In Past Year (Non-Investment Banking Securities-Related Services)

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S&P 500
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AMZN
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APA
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AHPI
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BIDU
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BP.
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CBV
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FDX
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MHK
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RAI
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SPDR CD SEL
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AAPL
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GOOGL
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