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In Sept., Will S&P 1040 Hold As Market ‘Support’?

Stocks finished modestly higher on Tuesday but the gains provided little solace for bulls. By the session's end the S&P slipped nearly 5% for the month making this the worst August in 9 years.

Also for the month, the Dow fell 4.31 percent while the Nasdaq tumbled 6.24 percent.

Now investors are holding their breath as they head into September, historically a terrible month for the Street. In fact, over the past 20 years it’s been the very worst month of the year for the market.

However, bulls aren't ready to throw in the towel just yet; there is some positive action. The S&P 500 bounced off the key technical level of 1,040 for the third time in the last five sessions.

How should you position now?

Instant Insights with the Fast Money traders

At least for the next couple days, I expect the market to hold. In fact, I think the market moves to the upside, speculates Tim Seymour. Key financials and technology stocks such as Intel look oversold to me and their charts suggest they bounce.

Don’t forget that the S&P is still positive for the quarter, says Joe Terranova. We’re up 1.77% for Q3. And we continue to hold above the July lows. Personally, I think the market has limited downside from here. So much money has already rotated into the bond market that I think the big elephants have already left the tent.

I agree that the market can and probably will bounce and if you're looking for a trade FedEx should get the job done, muses Guy Adami.

As far as I’m concerned 1050 is a key level on the S&P, says Steve Grasso. I’ll be watching that closely. Also, I can't help but wonder if we've already had our September in August.

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AUGUST BEST: GOLD

If there was a trade that worked in August it was long gold . The precious metal ended the month near its August highs after a raft of soft economic data lifted its appeal as a haven.

"People are fearful enough of what else is going on in the economy and that is sufficient to justify what is going on in gold," explains Peter Hillyard of ANZ in a Reuters interview.

"It's a bit of a continuation of what is going on in other markets with month-end and I think $1,300 is on the cards... as soon as September," he adds.

What’s the trade?

I’m seeing call buying in December at the 1500 strike, says Joe Terranova. That suggests market participants expect gold to make a sharp move higher. They seem to want to own gold. Personally, I think gold is going to $1300 in the near-term.

I’m watching the Gold Miners ETF , counsels Pete Najarian on the Halftime Report. They've had a big run. Recent options action suggested big investors expected this ETF to go to $55 and that's about where we are now.

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AUGUST WORST: FINANCIAL SECTOR

And if there was a trade to avoid in August it was long banks . Concerns about the economy, employment and the ability of consumers to pay back loans sent these stocks tumbling.

Looking at the Bank ETF, 15 proved to be a point of strong resistance with bears pressuring the sector from that point forward. It’s largely believed that the market can’t rally sustainably without the banks.

What the trade?

I don’t see vanilla institutions buying financials, reveals Steve Grasso. In fact my clients seem to be letting them go further and further down.

The one trade I’d look at in the space is long Citi, says Joe Terranova. Around $3.70 I like it.

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AUGUST WORST: TECH SECTOR

Tech was another underperformer this month. Investors struggled with the sudden departure of HP's Mark Hurd, a disastrous forecast from Cisco , and downgrade after downgrade for BlackBerry maker RIM .

What’s the trade?

In this space I like Intel, says Tim Seymour. I think the stock is badly oversold.

Around $123 IBM looks attractive to me, says Guy Adami, but it’s a long-term investment.


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STOCK MARKET IS SIGNALING RECESSION COMING BACK

Will the remainder of this week's economic data disappoint? David Levy of The Jerome Levy Forecasting Center sits squarely in the bearish camp.

Find out why he thinks all coming signs point to another recession!

Watch the video now!






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Trader disclosure: On August 31st, 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), (EEM), (INTC), (POT); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST); Terranova Owns (AXP), (GS), (IBM), (QCOM), (AAPL), (GOOG), (BRCM), (TER), (MSFT), (C), (MRVL), (BMO), (V), (POT), (OXY), (GLD), (SU), (FCX), (APA), (XBI)

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)

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 (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)

For Peter Schiff
Funds managed by Schiff own (POT)
Funds managed by Schiff own (BHP)

For David Levy
***No Disclosures***

For Colin Gillis
***No Disclosures***

For Farha Aslam
***No Disclosures***

For David Bank
RBC Capital Markets is currently providing Time Warner Inc. with non-investment banking securities-related services.

RBC Capital Markets has provided Time Warner Inc. with non-investment banking securities-related services in the past 12 months.

RBC Capital Markets is currently providing Comcast Corporation with non-securities services.

RBC Capital Markets is currently providing The Walt Disney Company with non-securities services.

RBC Capital Markets has provided The Walt Disney Company with non-securities services in the past 12 months.



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