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Pros: Are Technicals About To Sideline Bulls?

Investors struggled to make heads or tails out of this market with the Dow surging higher by triple digits on Thursday but the S&P unable to break above 1200.

GM generated considerable bullish momentum as enthusiasm for the IPO seemed to trigger an overall positive tone in the broad market.

"This is bigger than just an IPO. It's an American icon coming back on stream and it is feeding optimism to the stock market," says Bernie McGinn of McGinn Investment Management in a Reuters interview.

However the technicals tell a different story.

The S&P 500 hovered around 1,200 for most of the session but failed to get above that key level. "There's a lot of selling pressure at the 1,200 level, there's buying pressure at 1,150 and we're in a tight range until further notice," says Joe Battipaglia of Stifel Nicolaus.

And even if the S&P pierces the 1,200 level, technicians say the S&P 500 would still face hefty resistance at 1,228, the highest S&P level in more than two years.

Will technicals prevail? Or has the GM IPO changed the tone of the market? How should you position now?

Instant Insights with the Fast Money traders

I think we’re stuck in a range, says Joe Terranova. I don’t think there’s a lot of downside but I don’t see a strong catalyst to take us any higher than that 1,228 level. I think we’re sideways into the end of the year.

I ‘do’ think GM has triggered a sentiment change in the market, says OptionMonster Jon Najarian. One can never overstate what a sentiment change can do for market psychology. I expect we’ve broken the momentum behind the sell-off. It’s a very positive sign.

I’m not that euphoric about Thursday’s market action, says Guy Adami. I think the move higher has more to do with the market being oversold earlier in the week. On the S&P, I’m keeping an eye on 1173. It’s been a key level of support.

I agree that 1172 has been a key level, it was the bounce back level after the Flash Crash, adds Steve Grasso on the Halftime Report. But since November 9th we’ve been in a downtrend and that hasn’t changed. I’d be wary of getting into the market here.

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GM DRIVES MARKET

Looking at the GM trade more closely the stock opened Thursday morning on the NYSE at $35 and traded higher before paring gains into the close?

Should you get in?

If you can get GM below $33 I think it’s a buy, says Karen Finerman. I think the valuation is compelling at that level.

I think GM is all about the new Chevy Volt, says Barry Ritzholtz. If the car is a big success like Toyota's Prius then I can see future upside for GM. But right now the stock is priced very close to fair value.

GM options start trading on the Monday after Thanksgiving, says Jon Najarian and I think they should put a floor under the stock. With options available big investors will be more willing to hold onto the stock because they can also buy put protection.

Also GM may be added to the Russell 3000 as soon as December 17th, reminds host Melissa Lee. That could provide support, too

Forget the technicals and momentum in this stock -- I would only be a buyer of GM when someone stops me on the Street and tells me how excited they are to buy a GM car, counters Patty Edwards.

I think there are bright spots at GM, says Tom Villalta of Jones Villalta, but I'd like to see more momentum behind GM and more of a public market track record before I'd take a look at the stock. Instead I'd play autos with Ford. The operational leverage, the cost structure and the product line-up appear stronger. And I like the management team much better.

I agree that Ford is a better company, says Anthony Scaramucci.



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Trader disclosure: On November 18, 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; Terranova owns (UPL), (C), (PEP), (VRTS), (OXY), (GS), (POT), (AAPL), (ORCL), (MCD), (NKE), (IBM); Finerman owns (AAPL); Finerman’s firm owns (GM); Finerman owns (DYN); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (MDY); Finerman's Firm Is Long (GM); Finerman's Firm Is Long (GOOG); Finerman's Firm Is Short (IJR); Finerman's Firm Is Long (JPM) ; Finerman's Firm Is Long Russell Puts; Finerman's Firm Is Long S&P Puts ; Finerman's Firm Is Long (PDE) Call Spreads; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Jon Najarian is Long (BKE); Jon Najarian owns (COP) short calls; Jon Najarian owns (CRM) short calls; Jon Najarian owns (DRYS) short calls; Jon Najarian owns (F) short calls; Jon Najarian owns (FIRE) short calls; Jon Najarian owns (FFIV) short calls; Jon Najarian owns (FSLR) short calls; Jon Najarian owns (DLTR) short calls; Jon Najarian owns (DG) short calls; Jon Najarian owns (WMT) short calls; Jon Najarian owns (FCX) short calls; Jon Najarian owns (FCX) call spreads; Jon Najarian owns (GOOG) call spreads; Jon Najarian owns (LTD) call spreads; Jon Najarian owns (FIRE) call spreads; Jon Najarian owns (GT) call spreads; Jon Najarian owns (GM) converts

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
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For Anthony Scaramucci
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For Barry Ritholtz
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For David Riedel
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