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Halftime: Fed, Mid-Terms To Derail Rally, Or Power Us Higher?

On Monday, stocks traded in the green but well of their highs of the day as investors braced for midterm elections, the Fed and the jobs report – or as the Fast Money desk calls it - the most important week of the year.

With three turbo-charged catalysts bombarding the market in such a short period of time, how should you position?

Instant Insights with the Fast Money traders

I’m watching the Vix, says Pete Najarian which is only modestly higher. On the surface that suggests we’re looking at a ho-hum week but if you dig down you’ll also see it’s trading below its 50, 100 and 200-day moving averages. That makes me wonder if we’re about to explode one way or another.

Looking at all three major indexes I’m seeing put buying but it’s likely protective buying not panic buying. I don’t see anything that suggests we’re going to fall apart. I like the market right here.

I’m watching the 1190 level in the S&P, says Steve Grasso. It’s been a level of strong resistance recently. Personally, I wouldn’t be surprised to see the S&P take a run at the April highs immediately following the election but I suspect any pop we get will be a short lived. I'm not excited about the market, broadly. I'm a seller of pops.

I’m watching the euro/dollar cross, says Brian Kelly. It’s had a hard time getting above $1.40. That, too – is something to watch as a 'tell' for dollar strength. But right here I like the market and I'm a buyer.

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OIL AND ENERGY

The traders are keeping a close eye on the energy space with crude oil marching sharply higher Monday despite gains in the dollar.

Meanwhile, shares of Halliburton moved higher after Oppenheimer upgraded the stock to 'Outperform' from 'Perform,' saying it's protected from large liabilities.

What’s the energy trade?

Into year’s end I expect to see money rotate into this space, says Steve Grasso. A GOP win in the House is probably factored in – but a Senate win probably isn’t.

I’d play the space with Schlumberger or some of the other service names, says Zach Karabell. Whether the price of oil ticks higher or lower, the sector needs exploration and servicing.

In this space, I think the play is long the Russia ETF, says Brian Kelly. The Russian economy is based heavily on oil.

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CHART OF THE DAY – COTTON

Cotton hit limit up in Monday’s session on concerns over crop damage in China. The commodity is up over 70% year to date.

What’s the trade?

This is the kind of inflation that the Fed is looking for, muses Brian Kelly. They’re hoping that prices increase and that companies can pass along those increases.

That’s going to be incredibly difficult, adds Zach Karabell.

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TOPPING THE TAPE: INTEL, MICROSOFT LEADING THE DOW

Intel and Microsoft topped the tape on Monday with Macquarie upgrading Intel to 'Outperform' on improving orders.

What’s the trade?

After reading through the earnings report I think there is growth in Microsoft, says Pete Najarian.

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UNUSUAL ACTIVITY - MARVELL (MRVL)

Pete Najarian has spotted unusual options activity in Marvel .

A higher than usual volume of the Nov 20 calls and Nov 21 calls leads Najarian to speculate that this stock could make a sharp move higher.

And looking at the SMH broadly, the chips have outperformed over the past 5 days, he says. Money appears to be flowing into the space.




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Trader disclosure: On Nov. 1, 2010, the day this post was published, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Zachary Karabell owns (BP), (WFR) and (POT). Pete Najarian owns (GDXJ), (MRVL) calls, (PFE) and (F) bonds. Steve Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE) and (PRST).

For Brian Kelly:
Accounts managed by Kanundrum Capital own (POT)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SWC)
Accounts managed by Kanundrum Capital own (MCP)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own (JO)
Accounts managed by Kanundrum Capital own (SGG)
Accounts managed by Kanundrum Capital own (NIB)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own Euros)
Accounts managed by Kanundrum Capital are short Japanese Yen

For Steve Grasso:
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 (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 (MGM)
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 (OPEN)
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 (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (MCD)

For Zachary Karabell:
RiverTwice Capital owns (GLW)
RiverTwice Capital owns (POT)
RiverTwice Capital owns (IBM)

For Charles Boorady:
Credit Suisse makes a market in (CNC), (AGP), (MOH),
(GTS), (CNC), (AGP), (AET), (HUM), (UNH), (WLP) currently is, or was during the 12-month periods, a client of Credit Suisse
Credit Suisse has managed a public offering of securities for (CNC), (AET), (UNH), (WLP) within the past 12 months
Credit Suisse provided non-investment banking services to (AGP), (AET), (HUM), (WLP) within the past 12 months
Credit Suisse provided investment banking services to (GTS), (CNC), (AGP), (AET), (HUM), (UNH), (WLP) within the past 12 months.
Credit Suisse has received investment banking related compensation from (GTS), (CNC), (AET), (UNH), (WLP) within the past 12 months.
Credit Suisse intends to seek investment banking related compensation from (GTS), (CNC), (AGP), (AET), (CVH), (HUM), (UNH), (WLP), (MOH) within the next 3 months
Credit Suisse has received compensation for products and services other than investment banking services from (AET), (HUM), (WLP) within the past 12 months.


CNBC.com with wires.

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