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Market Pros: Hard to Be Negative Stocks Now?

By Monday’s close, a decidedly bullish tone seemed to prevail on Wall Street with chatter suggesting stocks could be about to break out.

The optimism was largely triggered by a technical move in the S&P 500 which closed at a four-month high breaking above 1130, a level of strong resistance in the past. (Since June the S&P 500 has struggled to make a sustained move above that level.)

If the level holds, investors who follow technicals closely, could take it as a sign that September's rally has much further to go and pour money into equities.

"We've been waiting for this level to be penetrated, and breaching it makes it hard to be too negative right now," explains Frank Gretz, market analyst and technician at Shields & Co in a Reuters interview

What must you know before you place your bets?

Instant Insights with the Fast Money traders

There’s also a reverse head and shoulders pattern in the chart of the S&P, explains Tim Seymour. Chart watchers now think the S&P can go to 1250. Considering we’re getting better data out of the economies of the world, enough positive catalysts are lining up – both fundamental and technical - that I think more money goes into stocks.

On Monday we saw participation in the rally from energy and some of the financials such as American Express, Mastercard and Visa , adds Joe Terranova. That’s meaningful.

Now, I’m watching the Fed, adds Terranova. How the market responds post Fed meeting on Tuesday will be telling. Can we continue the bullish momentum?

I think there may be some skepticism about the rally, adds Pete Najarian. When I look across all the major indexes I’m seeing puts trading at a 2 to 1 ratio over calls. If nothing else, investors are looking for protection.

Also, I’d suggest watching the dollar , says Tim Seymour. We’re approaching a new ‘golden cross’ and a weak dollar should mean game on for commodities.


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ORACLE AND HP DISPUTE ENDS

In breaking news, Fast Money host Melissa Lee explains that Oracle has resolved its litigation regarding Mark Hurd's employment.

And according to CNBC’s John Fortt although no money will be changing hands Hurd is giving back stock.

What’s the trade?

I think both Oracle as well as Mark Hurd's former employer HP are strong companies, says Tim Seymour. If you have a long term time horizon I’d be a buyer on any pullback.

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GARTMAN – AHEAD OF THE FED

Gold traded at new record highs for a third straight day Monday, fueling fears of inflation ahead of the Fed's key policy meeting on Tuesday.

What’s the trade?

The trend of gold is from the lower left to the upper right, reminds Dennis Gartman. That’s bullish.

I’m a buyer -- but not as an inflation hedge -- I believe it’s becoming a reservable currency.

Hear more from Gartman. Watch the video now!

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UNUSUAL ACTIVITY: RAX

Pete Najarian has spotted unusual options activity in Rackspace .

A larger than usual volume of calls traded on Monday leading to speculation the stock could make a sharp move higher.



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Trader disclosure: On Sept. 20th, 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), (GOOG), (MOS), POT); Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (MA), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SU), (SPLS), (RIG), (UPL), (VRTS); Finerman & Finerman’s firm owns (BBY); Finerman’s firm owns (DAN); Finerman owns (GOOG); Finerman’s firm owns (HPQ); Finerman’s firm owns (IBM); Finerman’s firm owns (POT) and calls; 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; Pete Najarian owns (NTAP) call spreads; Pete Najarian owns (POT) call spreads; Pete Najarian owns (RAX) call spreads; Pete Najarian owns (YHOO) ; Pete Najarian owns (GDXJ); Pete Najarian owns (DD); Pete Najarian owns (CNI); Pete Najarian owns (AKAM) call spread; Pete Najarian owns (DCSI) call spread

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 (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 (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 (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)

For Patty Edwards
Edwards owns (AAPL) for clients
Edwards owns (AMZN) for clients
Edwards owns (CSCO) for clients
Edwards owns (EMC) for clients
Edwards owns (FCX) for clients
Edwards owns (GOOG) for clients
Edwards owns (HPQ) for clients
Edwards owns (IBM) for clients
Edwards owns (NRG) for clients
Edwards owns (ORCL) for clients
Edwards owns (SYT) for clients

For Daniel Clifton
***No Disclosures***

For Dennis Gartman
***No Disclosures***

For Brian Nagel
Oppenheimer & Co. Inc. makes a market in the securities of (AAPL), (RIMM)

For Gary Shilling
Funds managed by Shilling own U.S. Treasuries

For Brian Marshall
***No Disclosures***

For Ed Mills
***No Disclosures***

For Mike Khouw
Cantor Fitzgerald makes a market in (X)


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