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Halftime: Market Had Typical September In August?

Monday, 13 Sep 2010 | 1:19 PM ET

Maybe history doesn’t repeat itself after all. Despite being the worst month historically for stocks – this September has been anything but bearish.

And on Monday the bulls appeared to be solidly in control of the market again.

Looking at fundamentals, industrial stocks climbed after China released upbeat data about factory orders and financials gained after new global banking rules allowed for extended deadlines.

Banks Rising High on Basel III
Stocks cruised past some key technical levels Monday morning as strong China growth and weaker banking rules helped push up equities. Steve Grasso, of Stuart Frankel; Zachary Karabell, of River Twice Research, discuss this and more with the Fast Money traders.

Technicals were also bullish - the S&P 500 broke above 1116 its 200-day moving average a level of past resistance.

The action has led to speculation that weakness typically seen in September came early this year - in August?

What should you be watching, now?

Instant Insights with the Fast Money traders

I’ve been watching Goldman, Freeport and Cliffs, reveals Pete Najarian. I consider them ‘tells’ and all have been performing quite well. However the Volatility Index is starting to spike again which suggests fear is creeping back into the market.

I’m watching the technical action in the S&P, reveals Steve Grasso. With the S&P breaking above the 200-day the next key levels to watch are 1131, the June high and 1129, the high reached during the first week of August. Also continue to keep an eye on 1116, at that level I expect we see profit taking. We’re likely at an inflection point, if the market breaks either way we should be good for 20 handles.

Broadly, I’m very skeptical of the rally, says Steve Cortes. The news that we got out of China was very good but rather than make me bullish I interpret it as time to take profits because it’s probably hard to get news that’s any better. Also Treasurys are trading well which suggests there’s a bid to insurance. I’d go long bonds.

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TOPPING THE TAPE: FINANCIALS

New details about global banking standards helped lift bank stocks on Monday. JP Morgan, Citigroup and Bank of America all rallied on news that they'll have plenty of time to adjust to the new requirements, which won't go into effect for nearly a decade.

How should you trade banks?

Yes, Basel III provides a 5-10 year phase in period, however I’d hesitate to get long financials, explains Zach Karabell. I don’t expect Q3 earnings to be good.

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UNUSUAL ACTIVITY: SUN TRUST

Pete Najarian has spotted unusual options action in Sun Trust.

A much larger than usual volume of September 26 calls and Oct 27 calls leads the Pit Boss to speculate the stock could have more upside.


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TOPPING THE TAPE: COMMODITY/INDUSTRIAL STOCKS

As we mentioned above, commodities gained on Monday after China released strong economic data.

What’s the take way?

This is a pretty good picture for China and I think China provides a floor for global economic activity, says Zach Karabell. But whether that gets factored into the markets on a daily basis is another story. If you’re looking for a trade I’d consider playing Vale as an iron ore play.

I think long term China related plays do well, but in the near-term I’d take profits, counsels Steve Cortes.

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EXXON MOBIL

Shares of Exxon traded lower Monday after Deutsche Bank analyst Paul Sankey cut his rating on the stock to “Hold” from “Buy,” while lowering his price target to $65, writing that the U.S. mania for unconventional natural gas is creating a glut in gas, lowering his outlook for prices

What’s the trade?

If you’re looking to play nat gas play I’d do it with Chesapeake or Devon, says Steve Grasso, not with Exxon Mobil.

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TOPPING THE TAPE: CHIP STOCKS

Chip stocks made a comeback on Monday with investors bottom fishing after concerns about PC sales hit hard last week.

What should you make of it?

I think investors may be bottom picking, says Pete Najarian. But chips were so oversold I wouldn’t read too much into it.

It also looks like short covering, adds Steve Grasso.

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CALL TO THE FLOOR: TIBCO

In Monday’s call to the floor, hear from Tibco , a real-time software provider with clients ranging from the NYSE to Harrah's Entertainment.

With shares soaring more than 60% this year how should you position?

Don’t make a move until you check out our conversation with CEO Vivek Ranadive!

M&A Spree Continues
The flurry of M&A continues, and the Fast Money traders tell you how to cash in. Vivek Ranadive, CEO of software company Tibco, joins the conversation and tells the Fast Money traders what's driving his company's growth.

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CALL THE CLOSE

Pete Najarian: I think the market starts to struggle.

Steve Grasso: This is a technical market with the range to watch 1110 – 1131. If the market breaks either way we should be good for 20 handles.

Steve Cortes: Long bonds

Zach Karabell: Long stocks


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Trader disclosure: On Sept. 13th, 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 owns (STI) calls; Pete Najarian owns (CNI) short calls; Pete Najarian owns (TCK) short calls; Pete Najarian owns (SCCO) calls; Pete Najarian owns (AKAM) call Spread; Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST); Cortes is short (XRT); Cortes is short Gold; Karabell owns (C), (GS), (FCX), (BRCM)

For Zach Karabell:
River Twice owns (GS)
River Twice is short (SMH)

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 (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
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 (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)



CNBC.com with wires.

  Price   Change %Change
S&P 500
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BAC
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C
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CLF
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FCX
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GS
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JPM MLP ETN
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STI
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TIBX
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VALE'A
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VIX
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SPDR FIN SEL
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SPDR IND SEL
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XOM
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