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Halftime: New, Subtle Signs Of Strength?

Published: Tuesday, 24 Aug 2010 | 1:37 PM ET

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By: Lee Brodie
Producer

Halftime Report

With economic worries slamming stocks [.SPX Loading... () ] again Tuesday, is it time for bulls to throw in the towel?

Not so fast. Subtle signs may be emerging that suggest the economy isn't so bad after all.

At least, that's the reasonable conclusion we drew after our conversation with Cypress Semiconductor [CY Loading... () ] CEO T.J. Rodgers.

He tells Fast Money business is good in Silicon Valley -- very good.

”I don’t see weakness in any segment. Maybe PC’s a little bit but there is no segment of our customer base that’s hurting right now.”

In fact, he suggests the market and the media are getting it all wrong.

“I watch TV and read the newspapers and get scared. But then I got to work and my people tell me they’ve got more orders than they can handle. I can’t say we’re in a deep freeze based on my backlog."

Considering the chip industry is often considered a leading indicator of future demand, OptionMonster Pete Najarian likes what he hears.

"Cypress sure looks like a great opportunity," he says. "In fact many tech stocks look cheap but few stocks in the space are performing right now."

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KASS: I JUST CAN'T BE NEGATIVE NOW

The Cypress CEO isn't the only one making positive comments. Widely followed strategist Doug Kass tells the desk "I just can't be negative now."

Not only does Kass favor stocks, particularly bank stocks, but he's turning bearish on bonds and other fixed income investments.

We found his commentary so important we've written a separate post.

Click here to read "Kass: I Just Can't Be That Negative Now."

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TURNAROUND: OIL SERVICES

The Oil Services ETF [OIH Loading... () ] provided a pocket of strength also on Tuesday, despite economic data that would suggest the US could be at risk of a double dip.

Perhaps even more noteworthy, the move comes despite bearish action in the spot price of crude [CLC1 Loading... () ], which touched a 7-week low.

What’s the trade?

Gains in this space were triggered by published reports suggesting the White House could lift a moratorium on new deep-water oil exploration before Nov. 30 if oil companies can persuade the government their operations are safe, explains Joe Terranova. But I’d play the space with integrated names such as Occidental [OXY Loading... () ] or Suncor [SU Loading... () ], he counsels .

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TURNAROUND: HOUSING

To the surprise of many investors, the Housing ETF [XHB Loading... () ] traded higher on Tuesday, despite data that showed existing home sales dropped a record 27% in July -- the lowest since May 1995.

What’s the trade?

I think this move is about shorts being squeezed out, muses Pete Najarian. I doubt we’re seeing new money flow into these names. But I wouldn’t be short.

I covered my shorts on banks with big mortgage exposure, adds Steve Cortes. I thought the market was underestimating the housing problem but now that it’s front page news, I wouldn’t be short anymore.

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SAFEHAVEN?

Gold [GCC1 Loading... () ] also made gains on Tuesday as investors turned to this safe haven trade in the wake of lousy housing data.

What's the trade?

When I look at the market, the best trade I see is gold, says Joe Terranova. It held the 50-day; technicals as well as fundamentals line up well for a long position.

If you think gold is going higher I’d look at a position in the Gold Miners ETF [GDX Loading... () ], says Pete Najarian.

I’m watching Bernanke’s comments due out Friday, adds Brian Kelly. I think they will trigger concerns about inflation and that makes me bullish gold as well as silver [SLV Loading... () ].

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FAST FLASH: BANK OF AMERICA

Shares of Bank of America [BAC Loading... () ] touched another 52-week low, just one day after BofA CEO Brian Moynihan snapped up 30,000 shares of his company for about $13 each.

Should you follow him in?

I’m not sure if BofA is a value trade or a value trap, says Pete Najarian. The XLF just can’t seem to rally. I’m noticing in the options market investors expect banks to remain flat.

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CALL OF THE DAY: ROSENBERG: THIS IS A DEPRESSION

A widely followed economist thinks the US is in trouble – real trouble. In a note published on Tuesday, Gluskin Sheff economist David Rosenberg suggested that positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression.

Looking at history, Rosenberg argues that the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Of course we’d be remiss not to note that Rosenberg is a renown bear and has been making somewhat gloomy prognostications for quite some time.

Nonetheless, the similarities he’s discovered between the 1930’s and today are certainly thought provoking, if not downright worrisome.

Learn more. Hear from Rosenberg himself – watch the video now!

Read More:

Click here to go to “Economy Caught in Depression, Not Recession: Rosenberg”

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Trader disclosure: On August 24th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Pete Najarian is long (HPQ) calls; Pete Najarian is long (TCK); Pete Najarian is long (SCCO); Pete Najarian is long (CNI); Pete Najarian is long (V) call spreads; Pete Najarian is long (WDC) calls; Pete Najarian is long (STX) calls; Pete Najarian is long (AKAM) call spread; Pete Najarian is long (DD); Pete Najarian is long (X); Cortes is long (FCX); Cortes is long (SFD); Cortes is long (BHP); Cortes is long Crude Oil; Cortes is long Australian Dollars; Terranova owns (AXP), (C), (BMO), (V), (POT), (OXY), (GLD), (FCX), (APA), (SU), (XBI), (MRVL), (TBT)

For Brian Kelly
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SLY)
Accounts managed by Kanundrum Capital own U.S. Dollar
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital are short (IAI)
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (MCO)
Accounts managed by Kanundrum Capital are short (RTH)
Accounts managed by Kanundrum Capital are short (AFL)
Accounts managed by Kanundrum Capital are short the Mexican Peso

For Joe Terranova
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)

CNBC.com with wires.

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