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Market Pros: Is Market Entering No-Man’s Land?

Although stocks closed higher on Wednesday, the price action in the market was less than compelling leading investors to wonder if Fed action will be enough to keep the rally alive.

As you likely know, in a statement released on the second day of its two day meeting, the Fed provided new and highly anticipated details about the size and scope of its controversial new policy to stimulate the economy.

Essentially the central bank plans to buy $600 billion more in government bonds by the middle of next year. The decision, which takes the Fed into largely uncharted waters, is aimed at further lowering borrowing costs for consumers and businesses.

However, investors largely believe those developments are already factored into the market and stocks languished into the close.

"The question is whether this is enough. The consensus was $500 billion over the next six months or so. This is just a little bit ahead," says Jeff Kleintop, chief market strategist at LPL Financial in a Reuters interview.

Is the market in nowhere land? How should you position now?

Instant Insights with the Fast Money traders

I still believe in this rally and I’m adding to my positions, says Joe Terranova. The markets have been anticipating a sell-off but I’m not sure it’s coming. I expect we see a chase for performance into year’s end. I see positive catalysts out there now. The jobs report may come in better than expected on Friday and the GOP sweep likely signals the Bush tax cuts will likely be extended for all. (Click here to go to Republican House Win Keeps Bush Tax Cuts Alive For All)

I look at QE2 as well as the election and the latest auto sales as three very positive catalysts, yet they barely moved the needle, counters Steve Cortes. In other word the market got a tremendous amount of good news yet the market yawned. I take that as a sign that the rally is done.

As a market tell, I’m watching the Vix, says Pete Najarian. It’s still below the 200-day moving average. There’s no panic in this market and that suggests the bias is higher.

How should you play the bond market in the wake of QE2? Find out from Rich Volpe of RBS. Watch the Word on the Street video above.

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GOLDMAN SAYS BEWARE BANKS

The traders are closely watching the action in banks after Goldman Sachs said the largest U.S. banks face "potential losses of $26 billion spread across several years" as they are forced to buy back securitized mortgages or take other credit losses on loans going through the foreclosure process.

What’s the trade?

Although the banks may bounce on QE2 I'd sell the pop just because of reasons like the one above, says Guy Adami.

I'm actually turning bullish on banks, counters Steve Cortes. In the wake of the Fed announcement the yield curve turned much steeper.

I agree with Steve about the yield curve, adds Brian Kelly. I really like playing the sector with TD.

Hear what Sandler O'Neil analyst Jeff Harte tells the desk about which banks benefit from QE2 and which don't. Watch the video now!

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AFTER HOURS ACTION: QUALCOM

Shares of Qualcomm surged 8% in extended trade after the company reported earnings and sales well ahead of Wall Street expectations.

By the numbers, the wireless chipmaker said it earned 68 cents a share in its fiscal fourth quarter, against 64 cents a share in the same period last year.

Revenue was reported at $2.95 billion, against $2.68 billion a year ago.

Stock analysts who follow the company had expected it to report earnings of 59 cents a share on sales of $2.85 billion, according to a survey conducted by Thomson Reuters.

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What’s the trade?

I’m watching $49.80 as a key level, says Guy Adami. If the stock closes above it, I’d take it as a bullish sign.

I’m seeing upside call options trading in this name, adds Pete Najarian. That suggests at least some investors are making a bullish bet.

> Click here for more coverage of Qualcomm earnings-------

OIL BREAKS ABOVE $85

U.S. crudeoil futures rose more than $1 to a six-month high of $85.04 a barrel on Wednesday before paring gains into the close.

What should you make of the action?

I think $78 is now the floor in oil and I expect the price to push toward $90 before year's end, says Joe Terranova. I’d play it long Hess.

I like playing the space with Baker Hughes, says Guy Adami, with $50.50 as my bogie.

I’d look at ConocoPhillips as well as Marathon Oil, says Pete Najarian.

Personally, I remain bearish oil, says Steve Cortes. But if oil trades above $85 for the next couple days I’ll take off my shorts.





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Trader disclosure: On November 3, 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 (BAC), (LVS), (MS) and (NTRS). Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC) and (MSFT). Cortes is short crude oil, gold, (AAPL) and (RSX). Cortes is long S&P 500. Cortes owns (GOOG), (K), (TSN) (CLX) and US Treasurys. Joe Terranova owns (APA), (AAPL), (AXP), (C), (GOOG), (GS), (FCX), (HES), (IBM), (MCD), (NKE), (ORCL), (PCP), (PEP), (UPL), (VRTS) and (XBI).

For Guy Adami:
Adami’s wife works at Merck

For Brian Kelly:
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (CLF)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own (HD)
Accounts managed by Kanundrum Capital own (PCL)
Accounts managed by Kanundrum Capital own (XHB)
Accounts managed by Kanundrum Capital own (FCX)
Accounts managed by Kanundrum Capital own (EWH)
Accounts managed by Kanundrum Capital own (CLF)
Accounts managed by Kanundrum Capital own Euros
Accounts managed by Kanundrum Capital are short Japanese Yen

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 (CMS)
Virtus Investment Partners own more than 1% of (CSC)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (FCFS)
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 (SOA)
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 (WMB)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

RICHARD VOLPE
RBS makes a market in U.S. Treasuries

JEFFERY HARTE
Sandler O'Neill has received compensation from (BAC), (C), (JPM) for investment banking services in the past 12 months.
Sandler O'Neill intends to seek compensation from (BAC), (C), (JEF), (JPM) for investment banking services in the next 3 months.
Sandler O'Neill has received compensation from (BAC), (C) (JPM), (MS) for providing products or services other than investment banking services in the last 12-months.
(BAC), (C), (MS) is a client of and receives non-investment banking securities-related services from Sandler O'Neill

PETER BOOCKVAR
***No Disclosures***

DEBORAH WEINSWIG
Citigroup owns 1% of (SKS), (SVU)
Within the past 12 months, Citigroup has managed an offering of (TGT), (WMT), (HD)
Citigroup has received compensation for investment banking services provided within the past 12 months from (TGT), (WMT), (SKS), (HD), (KR)
Citigroup intends to seek, within the next 3 months, compensation for investment banking services from (WMT), (KR)
Citigroup received compensation for products and services other than investment banking services from (COST), (M), (JCP), (KSS), (TGT), (WMT), (HD), (WAG), (KR), (SWY), (SVU) in the past 12 months.
Citigroup has, or had within the past 12 months, the following investment banking clients (TGT), (WMT), (SKS), (HD), (KR)
Citigroup has, or had within the past 12 months, the following non-investment-banking, securities-related clients: (COST), (M), (JCP), (KSS), (TGT), (WMT), (SKS), (HD), (CVS), (WAG), (KR), (SWY), (SVU)
Citigroup has, or had within the past 12 months, the following non-investment-banking, non-securities-related clients: (COST), (M), (JCP), (KSS), (TGT), (WMT), (HD), (WAG), (SWY), (SVU)
Citi makes a market in (COST), (M), (CVS)

ANTHONY SCARAMUCCI
Scaramucci and SkyBridge Capital owns (BP)
Scaramucci and SkyBridge Capital owns Gold

MIKE KHOUW
Cantor Fitzgerald makes a market in (OPEN)



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