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Halftime: Are 2010 Market Gains Behind Us?

Tuesday, 16 Nov 2010 | 1:13 PM ET

Stocks sold off sharply Tuesday with investors punishing commodities, tech and banks, broadly.

Two major catalysts sent investors running for the exits:

- Financial woes again surfaced in Europe. This time its Ireland that needs a bailout – as much as $100 billion euro.

- Reports surfaced that China intends to implement food price controls and crack down on commodity speculation.

With the Street in 'sell first and ask questions later' mode, the Dow broke below 11,000 and the S&P traded near its 50-day moving average of 1165.

Are 2010 market gains behind us? How should you position now?

Instant Insights with the Fast Money traders

I suspect active money managers are responsible for the sharp sell-off on Tuesday, says Joe Terranova. Into QE, the Street had been overweight and now they’re getting off the ride. As a result I believe the best of this year’s gains are likely behind us.

However, the widely held belief that the Bush tax cuts will be extended by Congress will probably put a floor under stocks too. As a results I think we’re stuck in a range. I wouldn’t buy this pullback, instead I’d wait for January.

Fast Money Midday Market Check
The "Fast Money" traders share their market insight and midday trading advice. Emily French, managing director of ConsillAgra, shares her insight.

Although I agree with Joe, Europe’s woes could make America’s stock market slightly more attractive, speculates Jon Najarian. It wouldn’t surprise me to see dollars become a little stickier here and not move around the globe quite so quickly.

What’s happening in Europe has sent the dollar to a 7-week high, adds says Emily French of ConsiliAgra. I’ m watching the 79.56 on the dollar index. If we break above that level - I'd take it as a technical signal of further advances.

If that happens I’d expect commodities to decline more. However, I'd also note that fundamentals remain in tact.

Looking at the negative developments out of Europe I’d caution investors not to throw the baby out with the bath water, not yet, adds Patty Edwards. With that said I would not be longthe euro and I don’t like the market.

I’m going to watch the rhetoric out of Austria, adds Brian Kelly. Austrian Finance Minister Josef Proell accused Greece of not meeting IMF / EU criteria by not collecting enough taxes. That’s a real problem. It’s a tricky situation and a slippery slope. Right now the market has as much buoyancy as a lead balloon.


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Trader disclosure: On November 16, 2010, the day this video was recorded, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova owns (AAPL), (UPL), (C), (PEP), (OIH), (GS), (FCX), (VRTS), (POT) and (IBM). Joe Terranova owns (FCX) puts. Jon Najarian owns (WMT), short calls. Jon Najarian owns (DLTR), short calls. Jon Najarian owns (DG), short calls. Jon Najarian owns (HD) call spreads. Jon Najarian owns (CREE) call spreads. Jon Najarian owns (BKE) call spreads. Jon Najarian owns (GDXJ) put spreads. Jon Najarian owns (GLD) put spreads. Jon Najarian owns (SLV) put spreads.

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)

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (IEF)
Accounts Managed By Kanundrum Capital Own (TIP)
Accounts Managed By Kanundrum Capital Own (REE)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (HD)
Accounts Managed By Kanundrum Capital Are Long Euro
Accounts Managed By Kanundrum Capital Are Short (YEN)

PATTY EDWARDS
Edwards owns (CSCO) for clients
Edwards owns (SLB) for clients
Edwards owns (GLD) for clients
Edwards owns (GS) for clients
Edwards owns (BKCC) for clients
Edwards owns (BMO) for clients
Edwards owns (SLV) for clients
Edwards owns (HD) for clients
Edwards owns (MAT) for clients
Edwards owns (SH) for clients
Edwards owns (LQD) for clients
Edwards owns (JNK) for clients

EMILY FRENCH
***No Disclosures***

HARSH KUMAR
Morgan Keegan makes a market in (CREE)
Morgan Keegan has received compensation for investment banking services from (CREE) in the past 12 months.
Morgan Keegan intends to seek compensation for investment banking services from (CREE) in the next 3 months.

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