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Why Tech Won't Remain a Laggard

Technology stocks found value buyers, as shares of Cisco Systems surged Monday.

Over the last five days, performance in the tech space has been "terrible," said Joe Terranova of Vitrus Investment Partners. But fundamentally, it won't remain a laggard because it's spending money.

Take Dell , for example, which paid $1.13 billion for 3Par, a storage company. The move helped push tech stocks higher Monday and now allows Dell to provide "cloud computing" services. That's where companies pay to have software delivered over the Internet. Terranova thinks the company is keeping up with the competition with this purchase because the pressure is on tech companies to provide "cloud computing," so this move made sense for Dell. He added that tech has the money to spend, so that will keep the sector hot.

The problem for the tech space is that investors are still worried about concerns about the sector that Cisco CEO John Chambers expressed last week, said Steve Grasso of Stuart Frankel. Jon Najarian of optionMONSTER.com pointed out that Chambers was talking about companies putting off purchases rather than accelerating them into the end of the quarter.

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S&P 1087 NEW KEY LEVEL: GRASSO

Once support, the 1087 level on the S&P has now become resistance, said Steve Grasso of Stuart Frankel on Monday's Fast Money.

What was support become resistance on the way back up, so 1065 on the way down and then 1056. Those are near-term support levels, he said.

With the 50-, 100- and 200-day moving averages converging on top of each other without any slope or direction, Joe Terranova of Vitrus Investment Partners doesn't think you can pay attention to technicals in this market.

Grasso responded by stating that we are looking at lower lows now. Take the 1131 level, for example, which is the intraday level from June 21, where the market couldn't break through upside. We couldn't break it on the way up, so now we're coming back in, Grasso said.

Brian Kelly of Kanundrum Capital thinks the market is confused. There are new 52-week highs, new 52-week lows and everything in between. He said you could pick a story and go with it because the market is just confused on which way to go.

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BONDS: BARGAIN OR BUBBLE?

The 10-year yield is at a 16-month low. The 2-year yield is at a record low.

At Fast Money, we get nervous when we hear too many superlatives. It made us wonder if bonds are a "safe haven" or a bubble in the making. For answers, we turned to Anthony Scaramucci of Skybridge Capital and author of "Goodbye Gordon Gekko."

Scaramucci said stocks, relative to bonds, look attractive for the first time in a long time. He thinks there is an "overheating" in the bond market. Pfizer has a 4.4% dividend yield, but its 5-year corporate bond is trading at 1.98%. Altria Group has a 6.2% bond and a 5-year bond at 3%. These baskets of securities are paying investors to wait for the turn in the markets. At the same time, the S&P is sitting on a ton of cash and are increasing their dividends. With the spread tight between S&P 500 names and high-yielding corporates, Scaramucci thinks this is an "extreme opportunity".

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"QE2" BEGINS TUESDAY

Federal Reserve Chairman Ben Bernanke will buy US Treasury bonds from Treasury Secretary Timothy Geithner Tuesday as "QE2" begins. The Fed has to buy these securities because they don't have any choice, said Dennis Gartman, a hedge fund manager and author of "The Gartman Letter". The Fed's mortgage backs have flown off the table, so to make sure reserves are in the system, they need to buy Treasurys. Gartman suggests investors don't short something the government wants.

Watch the video to hear Gartman's full comments on the Fed.

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WALMART REPORTS EARNINGS TUESDAY

Neil Currie, an analyst at UBS, told the Fast Money desk that he's not expecting too many surprises from Walmart's earings report Tuesday. He forecasts -1% comps, while the market expects between 1/2 and down 1%. Currie said Walmart's customers have been looking to cut back and save money where they can, so the retail giant has been dropping prices. Overall, he said whatever Walmart says on its conference call will have an impact on the rest of the retail sector.


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Trader disclosures for Aug. 16, 2010:

Joe Terranova
Terranova owns (AKAM)
Terranova owns (V)
Terranova owns (NRG)
Terranova owns (POT)
Terranova owns (OXY)
Terranova owns (GLD)
Terranova owns (BAX)
Terranova owns (MOS)
Terranova owns (PFE)
Terranova owns (SU)
Terranova owns (XBI)
Terranova owns (GOOG)
Terranova owns (LRCX)
Terranova owns (AXP)
Terranova owns (C)
Terranova owns (GS)
Terranova owns (BMO)
Terranova owns (MSFT)
Terranova owns (QCOM)
Terranova owns (FCX)
Terranova owns (APA)
Terranova is chief market strategist of Virtus Investment Partners, LTD.

Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (DRYS)
Virtus Investment Partners own more than 1% of (EXR)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (XLK)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)

Steve Grasso
Grasso owns (ASTM)
Grasso owns (BA)
Grasso owns (BAC)
Grasso owns (C)
Grasso owns (CSCO)
Grasso owns (JPM)
Grasso owns (LPX)
Grasso owns (MO)
Grasso owns (MOT)
Grasso owns (NDAQ)
Grasso owns (PFE)
Grasso owns (PRST)

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 (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 (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)

Karen Finerman
Finerman & Finerman's firm owns (BAC)
Finerman & Finerman's firm owns (CVS)
Finerman’s firm owns (GENZ) call spreads
Finerman’s firm owns (FLIR)
Finerman & Finerman's firm owns (HPQ)
Finerman & Finerman's firm owns (JPM)
Finerman's firm owns (RIMM)
Finerman & Finerman's firm owns (TJX)
Finerman's firm owns (WMT)
Finerman's firm owns (YUM)
Finerman's firm is short (IJR)
Finerman's firm is short (MDY)
Finerman's firm is short (SPY)
Finerman's firm is short (IWM)
Finerman’s firm owns S&P 500 puts
Finerman’s firm owns Russell 2000 puts

Jon Najarian
Jon Najarian owns (CSCO) short puts
Jon Najarian owns (EBAY) short calls
Jon Najarian owns (TJX) short calls
Jon Najarian owns (GIS) calls

Brian Kelly
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (JNJ)
Accounts managed by Kanundrum Capital are long Swiss Franc
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (XBI)
Accounts managed by Kanundrum Capital own (RIMM)
Accounts managed by Kanundrum Capital are long U.S. Dollar
Accounts managed by Kanundrum Capital are long Japanese Yen
Accounts managed by Kanundrum Capital are short (IAI)
Accounts managed by Kanundrum Capital are short (RTH)
Accounts managed by Kanundrum Capital are short the U.K. Pound

Anthony Scaramucci
Scaramucci and SkyBridge Capital own (MO)
Scaramucci and SkyBridge Capital own (PFE)
Scaramucci and SkyBridge Capital own (KFT)

Dennis Gartman
Funds managed by Dennis Gartman own gold

Neil Currie
(WMT) is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.
(WMT) is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided.
(WMT) is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.
Within the past 12 months, UBS Securities LLC has received compensation from (WMT), (SWY), (SHLD), (KR)

Bob Wetenhall
RBC Capital Markets Corp. makes a market in the securities of Strayer Education, Inc.

Mike Khouw
Cantor Fitzgerald makes a market in (NTRS)



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