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Halftime: Did GM IPO Change Market Sentiment?

Some investors are starting to wonder if recent market weakness was just a blip on the radar after stocks rallied sharply Thursday with the Dow surging by triple digits.

Optimism was largely sparked by the continued enthusiasm for GM’s IPO.

"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.

And McGinn is hardly alone in his assessment. Fast Money trader Jon Najarian feels much the same.

Has sentiment in the market shifted? How should you position now?

Instant Insights with the Fast Money traders

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 seeing the rainbow and there’s no sparkles in the air, counters Patty Edwards. Maybe we’re putting in a bottom but I’m not as optimistic as Jon Najarian.

I think the move higher has more to do with the market being oversold earlier in the week, says Guy Adami. 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. 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 this morning on the NYSE at $35 and is now trading up about 6 percent from its offer price.

Should you get in?

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.

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.

*check out our entire conversation with Tom Villalta in the video above.

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BUZZKILL: SEARS

The traders are closely watching the action in Sears after its quarterly loss nearly doubled as sales at its namesake chain plunged, raising concerns about the retailer's prospects heading into what is shaping up to be a highly competitive holiday season.

What’s the trade?

The big takeaway from Sears is that appliances are not selling, says Patty Edwards. That seems to be a trend that’s manifesting across retail. Companies that sell small luxuries such as Limited may do better.

As far as I’m concerned - in this space the one company that works for me is Home Depot, says Guy Adami.






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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; Guy Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC) and (MSFT). Jon Najarian owns (COP) short calls. Jon Najarian owns (CRM) 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. Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LPX), (MOT), (MHY), (NDAQ), (PFE) and (PRST). Tom Villalta owns (F).

GUY ADAMI
Adami’s wife works at Merck

PATTY EDWARDS
Edwards owns (AAPL) for clients
Edwards owns (CVX) for clients
Edwards owns (CBI) for clients
Edwards owns (F) for clients
Edwards owns (FCX) for clients
Edwards owns (GE) for clients
Edwards owns (TTM) for clients

STEVE GRASSO
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
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 (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
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 Its Partners Own (UNM)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (MCD)
Stuart Frankel & Co and it’s partners are short (AAPL)

TOM VILLALTA
Funds and accounts managed by Villalta own (F)

TIM SEYMOUR
***PENDING***

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