You could almost see investors scratching their heads Tuesday as they tried to make sense of the weakness in tech.
Again, the financial issues vexing Europe generated the major headwinds in the market but it was unclear why that catalyst would hit the technology sector.
Some strategists think it may be a sign that overseas woes are starting to ripple.
"The idea of a contagion is being taken more seriously both in the European Union and how it might affect (U.S.) markets," explains David Katz, principal & senior portfolio strategist at Weiser Capital Management in a Reuters interview.
Keenly aware of the developments, the Fast Money traders think Tuesday’s tech action may be very telling.
What must you know? How should you position now?
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Instant Insights with the Fast Money traders
Technology led the market higher due to the weaker dollar, explains Joe Terranova. If you look at the relationship between the dollar and the Nasdaq you can see that high point in the Nasdaq is directly related to the low point in the US dollar. But dollar weakness is probably over in the short-term.
As a result, if you were overweight tech from September to November, I’d scale down to market-weight or underweight, Terranova counsels, but I would not go short.
I would say the trade is longdollar, adds Steve Cortes.
But in addition to moves in the greenback, I think the sell-off in tech has everything to do with de-risking, he says. Money managers are taking profits in their trades that have done well. They’re not going to risk losses with the year ending in 5 weeks.
In tech, I’m one of those money mangers taking money off the table, reveals Patty Edwards. I’ve trimmed positions in Akamai and F5 – because these stocks have had significant runs and it’s sound discipline to take profits.
I don’t think we’re seeing a fundamental change in the tech story – rather tactical trades into year’s end. If you have a long-term time horizon, I think the sell-off is an opportunity. I’m a buyer of Qualcomm.
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EURO VS. DOLLAR
As you might expect, concerns about the financial stability of Europe triggered a sell-off in the euro with investors pushing it down to a 10-week low against the U.S. dollar.
What’s the trade?
I think the situation in Europe is so dire I’d sell any rally in the euro or European stocks, says Steve Cotes. I’m expecting the euro to trade down to about 120.
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SILVER & GOLD
The traders are closely watching the action in silver and gold – as well as copper – all traded higher despite a stronger dollar.
What’s the trade?
I’m a buyer of gold, says Patty Edwards. Over the long-term I want to be in something that retains its value and in an environment where investors are a little scared – I think it’s gold.
China approved the country's first mutual fund that bets on gold prices, explains Brian Kelly. That could generate more demand for the precious metal.
When you look at commodities, I think time is on your side, says Joe Terranova. I expect the economies of the world to heal in 2011 and money managers will want to be in this space. But I’d rather own copper, energy or ag names than gold. I’m not saying short gold – simply I’d rather own the others.
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TERRANOVA’S TWITTERING BEST COMMODITY PLAYS TODAY
Be sure to follow Joe Terranova on Twitter all day as he tweets his trades. He'll bring you his best ideas tonight at 5 pm on Fast Money.
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AMAZON, BARNES & NOBLE HITS RETAILERS
Let's get to the action in the retailers – with the sector trading mostly higher after better than expected consumer confidence data.
What’s the trade?
I do channel checks every Black Friday and the biggest lines I saw anywhere were in Limited stores, says Patty Edwards. Also in my checks I noticed a lot of people in The Buckle. But broadly I was not that impressed. If you’re looking for a trade I'd stick with the high end and look at Tiffany and Coach . Elsewhere in the space I have Limited on my radar.
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Trader disclosure: On November 30, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (FCX), (UPL), (C), (PEP), (VRTS), (OXY), (AXP), (GS), (POT), (AAPL), (NKE), (OIH); Cortes owns (GS), (MS), (CLE), (TSN); Cortes is short (XLE); Cortes is short (UNP); Cortes is long U.S. Dollar vs. Mexican Peso, Australian Dollar; Cortes is short Crude Oil; Cortes is short Nat Gas; Cortes is short Corn; Cortes is long US 2-year notes
For Brian Kelly
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (RDC)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (AAPL)
Accounts Managed By Kanundrum Capital Own (DRIV)
Accounts Managed By Kanundrum Capital Own (DRYS)
Accounts Managed By Kanundrum Capital Own (JJG)
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)
For Patty Edwards
Edwards owns (AAPL) for clients
Edwards owns (MSFT) for clients
Edwards owns (GS) for clients
Edwards owns (TIF) for clients
Edwards owns (AMZN) for clients
Edwards owns (F) for clients
Edwards owns (TTM) for clients
Edwards owns (MSFT) for clients
Edwards owns (GLD) for clients
Edwards owns S&P 500 for clients
Edwards owns Nasdaq 100 for clients
Edwards owns Gold for clients
Edwards owns Silver for clients
Edwards Owns (COH) For Clients
For Lou Kerner (Wedbush Securities)
Wedbush Securities Is A Market Maker in (GOOG)
Kerner Has A Long Position In Facebook (Private)
CNBC.com with wires.
