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Halftime Pt. 1: New Bearish Signals Emerging?

Once again investors found themselves grappling with weakness in the market after stocks made early gains but then turned south.

The Street grew particularly concerned about the health of the consumer after both Kellogg and Colgate issued weaker than expected results.

Also, technology dragged down the markets broadly after chip maker Nvidia slashed its second-quarter sales outlook, citing weakness in Europe and China.

Adding to the headwinds, Federal Reserve Bank of St. Louis President James Bullard released a paper in which he talked about the potential for deflation.

Overseas action wasn't any more bullish. Pete Boochvar of Miller Tabak tells us to note that markets around the world are also losing steam just as the S&P fails at its 200-day moving average around 1113.

How should you position now?

Instant Insights with the Fast Money traders

I’m bearish and I think I’m right, says Guy Adami. We’re getting a slew of market ‘tells.' The Kellogg’s CEO talked about the ‘difficult business environment'. Visa’s earnings were okay but not great. ’ As far as I can tell the consumer is challenged.

I’m now watching 1090 as a critical level on the S&P, adds Steve Grasso. If we break that level I suspect investors will become fearful and maybe even panic a little bit. In the wake of results from Kellogg and Colgate investors are rethinking their defensive trades, he explains.

I still like some of the blue chip consumer stocks such as Campbell , Heinz and Coke, says Patty Edwards. I think there’s value in names such as these but it’s important to do your homework and also hedge.

Looking ahead, if China’s PMI numbers are weak they could really take the air out of this rally, Adami adds. I’ve been wrong many times, he admits, but it feels like the market has turned and it wants to go lower.

We have a market that seems to be focused on deflation, muses Brian Kelly. That revives concerns about a double-dip.

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TECH TURN

As we mentioned above, Nvidia weighed on the Nasdaq after the company slashed its outlook, citing weakness in Europe and China.

The results follow weaker than expected earnings from Akamai and Symantec, after the bell Wednesday.

How should you trade tech now?

My clients are adding to their positions in technology on these kinds of dips, says Steve Grasso.

I think Akamai is starting to look attractive on the pullback, adds Brian Kelly.
If you want one play in the space I’d look at IBM, says Guy Adami. (IBM's Adami's Capital Idea Into Year's End. Click below to check out our other top trading ideas into the end of 2010.)

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EXXON EARNINGS BEAT

The traders are keeping a close eye on the energy sector after Exxon reported blow out numbers and Conoco-Phillips said profits in its refining business bounced back.

How should you be positioned now?

Some analysts think refining margins have peaked, says Brian Kelly. If the economy is going to slow down it makes me wonder if investors should be in these stocks in this kind of environment.

In the space, if you’ve been riding the rally in BP I think it’s time to take profits, says Guy Adami. I think it trades down to $33.

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WILL GDP CONFIRM OR DENY RALLY?

The traders are eagerly awaiting the latest GDP results due Friday before the bell. What they show could confirm or deny recent market gains.

What are you expecting? We want to know!



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Trader disclosure: On July 29, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Grasso owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST); Kelly owns (BP) puts

For Patty Edwards
Edwards owns (AMZN) for clients
Edwards owns (COP) for clients
Edwards owns (FCX) for clients
Edwards owns (HES) for clients
Edwards owns (NVDA) for clients
Edwards owns (XOM) for clients

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 (ESV)
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 (LEN)
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)
Stuart Frankel & Co and it’s partners are short (KEG)

For Brian Kelly
Accounts managed by Kanundrum Capital own (BAK)
Accounts managed by Kanundrum Capital own (VIV)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own Swiss Francs
Accounts managed by Kanundrum Capital are short (GLD)
Accounts managed by Kanundrum Capital are short (XME)
Accounts managed by Kanundrum Capital are short (SLX)
Accounts managed by Kanundrum Capital are short (RKH)
Accounts managed by Kanundrum Capital are short (XLK)

Jim Friedland
***No Disclosures***


CNBC.com with wires

Symbol
Price
 
Change
%Change
NASDAQ
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AKAM
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BP.
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CL
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COP
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CPB
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HNZ
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IBM
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K
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KO
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NVDA
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SYMC
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V
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SPDR NRG SEL
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SPDR TEC SEL
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XOM
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