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Halftime: Is Market About To Crack?

On Monday stocks traded lower with a cloud of anxiety seeming to settle on Wall Street. It appears investors are growing less and less certain that Europe can contain its financial woes, despite word of a bailout agreement for Ireland.

Those fears hit the currency market with the euro falling to more than two-month lows against the U.S. dollar and breaking the 200-day for the first time since September. In turn, that hurt commodity prices and shares in the materials sector.

"If Europe is having these systemic problems, it brings the question of whether our economic recovery is put on hold," says Angel Mata of Stifel Nicolaus Capital Markets in a Reuters interview.

To make matters worse for bulls, the S&P broke its 50-day moving average for the first time since early September.

Is the market about to crack? What should you be watching?

Instant Insights with the Fast Money traders

Instead of the 50-day I’m watching 1172 as a key level, which was the bounce back from the flash crash, Steve Grasso. That’s the level that market has held. If it breaks now, I’d expect the S&P to go straight to 1150.

Turning attention to Europe, there’s now chatter that Italy and perhaps Belgium may be looking at financial woes, explains Brian Kelly. The Street is worried that Europe will lurch from crisis to crisis. They’ve come up with a Stability Mechanism but in my opinion it will encourages speculators to go country by country and look for one’s that appear challenged.

Rallies in euro are meant to be sold, says Dennis Gartman. I think the euro has an almost terminal problem ahead of it. We’re looking at a rolling contagion from one country to the next. There are philosophical, religious and political divisions across Europe – they’ve been the root of troubles in the past and there’s no reason to believe they won’t be again.

It seems premature to forecast the demise of the euro, says Zach Karabell. And I see the recent sell-off in the S&P as a minor replay of what happened last May, he adds. Of course there are global investors who need to raise a certain amount of liquidity in anticipation of European debts going bad. But if it generates a pullback in the US market, I’d use it as an opportunity to get in.

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OIL STRONG DESPITE DOLLAR STRENGTH


The traders are keeping a close eye on the action in oil , which traded higher despite considerable dollar strength.

What should you make of it?

I’m wondering if there’s global demand for oil that the market hasn’t factored in, says Steve Grasso.

I’m bullish energy broadly, says Brian Kelly.

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TOPPING THE TAPE: FINANCIALS

Financials were the best performing sector Monday with Bank of America and JPMorgan topping the Dow.

What’s the trade?

Financials are in the green despite a tough tape, says Pete Najarian. I’m seeing a lot of put selling in Barclay’s which I take as interest in getting long the stock when it pulls back.

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RETAILERS POST-BLACK FRIDAY

The traders suggest keeping a close eye on retail after shoppers turned out in droves both at the malls and online.

What’s the trade?

In the space, I’m watching the Buckle, says Pete Najarian. I find it tempting because it’s trading at a discount compared to peers.

In the wake of the JCrew deal I’d look at Abercrombie, says Steve Grasso. I’m hearing in the event of a takeout it could also get a similar premium of 7 times – that would take it to $60.

If you think consumer electronics will do well this holiday, I’d look at Best Buy, says Brian Kelly. However, their comps concern me. Instead I prefer long Apple which I consider a retail play.

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Trader disclosure: On November 29, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian Owns (YHOO); Najarian Owns (MS); Najarian Owns (BAC); Najarian Owns (F) Bonds; Najarian Owns (DOW); Najarian Owns (NTRS); Najarian Owns (CRUS); Najarian Owns (GDXJ) call spread; Najarian Owns (FIRE); Karabell Owns (GOOG), (AAPL), (IBM), (C); Grasso Owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (X)


For Brian Kelly
Accounts Managed By Kanundrum Capital Own (TIP)
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (REE)
Accounts Managed By Kanundrum Capital Own (POT)
Accounts Managed By Kanundrum Capital Own (IEF)

For Zach Karabell:
River Twice Capital Owns (GS)
River Twice Capital Owns (MSFT)
River Twice Capital Owns (IBM)
River Twice Capital Owns (SBUX)
River Twice Capital Owns (GSIC)
River Twice Capital Is Short (SPY)
River Twice Capital Is Short (QQQQ)
River Twice Capital Is Short (XLF)

For Steve Grasso:
(ANF) Is A Holding In A Fund Owned By 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)

For Dennis Gartman
Funds Managed By Dennis Gartman Are Short Euro
Funds Managed By Dennis Gartman Are Long Gold
Funds Managed By Dennis Gartman Are Long Australian Dollar
Funds Managed By Dennis Gartman Are Short Wheat
Funds Managed By Dennis Gartman Are Long Corn, Soybeans
Funds Managed By Dennis Gartman Are Long U.S. Dollar
Funds Managed By Dennis Gartman Own (BPT)

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CNBC.com with wires.

Symbol
Price
 
Change
%Change
S&P 500
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ANF
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BAC
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BBBY
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BARC
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BKE
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JPM MLP ETN
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SPDR MAT SEL
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AAPL
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