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Halftime: Street Inclined To Shrug Off Bad News?

Friday, 3 Dec 2010 | 1:18 PM ET

Investors were attempting to determine if optimism was on a short leash after Friday’s jobs report disappointed the Street. To make the weak number all the worse, ahead of the number’s release the Street was whispering about a huge upside surprise.

There was a surprise all right but it wasn’t a pleasant one. Nonfarm payrolls rose 39,000, with private hiring gaining only 50,000, just a third of what economists had expected.

However all hope of a December rally may not be lost. By afternoon, the market had pared its early losses with the S&P showing impressive strength.

In fact, many bulls were asking if things were so bad, why was the Dow Transports making new highs?

Considering the market's impressive performance despite a terrible jobs report, is the Street currently inclined to shrug off bad news?

Instant Insights with the Fast Money traders

Largely the Fast desk does, in fact, expect the Street to shrug off bad news - at least for a while.

Pete Najarian is watching 3 signs he uses as a market ‘tell’ and he says they all look ‘decent.’ “Financials are holding up well, the Semiconductor ETF is doing ok and metals are performing impressively,” he says. If the Street was very worried, “I would have expected these three sectors to sell-off.” And the Vix is quite low, he adds. “I think there’s room to run. I think we break through to the upside.”

Word on the Street
An update on the trading day, including a look at the transports, hot commodities and a discussion about dropping volatility, which is at its lowest level since April, with Joe LaVorgna, Deutsche Bank, and CNBC's Melissa Lee & the Fast Money traders.

“Caterpillar and Parker Hannifin both hit multi-year highs this week and FedEx hit 7-month highs this week, adds Patty Edwards. All 3 names are tied to global growth and still performing well in Friday’s tape.”

She shares Pete Najarian’s outlook – in other words she would have expected more of a pull back if in fact, the Street was worried about a sell-off. However, she also suggests trading carefully. “I’d watch the close. I’m not willing to go to far out.”

And on the Strategy Session Gary Kaminksy reiterated something he also talked about on Fast Money - that the chase for performance is driving the market. ”The fear of relative under performance is the main factor motivating money managers,” Kaminksy says. “There aren’t many more days this year where there will be significant volume – days when they can try to catch up.”

In other words, he expects a chase for performance to trump most other catalysts for at least the next two weeks. And although there are 4 weeks of trading left - volume typically dries up close to the holidays making, "the 17th the last day where money managers can make a significant change to portfolio," he says.



Steve Grasso adds that from his vantage point on the floor of the NYSE he sees investors looking to buy dips but those dips never came. As a result “I think we may be looking at a substantial rally,” he says. "However I’d want to see the S&P close above 1228 before I can get on the bull ride."

And Deutsche economist Joe LaVorgna shares the bullish sentiment. Despite the weak jobs report “I think the (economic) outlook is quite good. I still like equities,” he says.

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TAKE PROFITS? METALS TRADE

Commodities continued to work on Friday largely due to the weaker dollar; gold, copper and silver all traded higher with cotton limit up for the third straight day.

What’s the trade?

I really like the industrial metals, says Brian Kelly. Although China is slowing it’s slowing to 8-9% growth. I’m bullish on global growth.

Elsewhere in the space, I pared my position in GDXJ , reveals Pete Najarian. They've been on fire and it was time to take profits.

If you're long, I’d think about taking profits in Freeport McMoRan , adds Steve Grasso. It’s had a $12 price swing in a week and a half.

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CHART OF THE DAY: S&P VS. STEEL

Steve Grasso suggests putting US Steel on your radar as a stock that outerperforms in the month of December.



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Trader disclosure: On December 3rd, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian Owns (GRS) Call Spreads; Pete Najarian Owns (GDXJ) Call Spreads; Pete Najarian Owns (DRYS) Call Spreads; Pete Najarian Owns (LOW) Calls; Pete Najarian Owns (MSFT) Call Spreads; Pete Najarian Owns (TCK) Call Spreads; Pete Najarian Owns (C); Pete Najarian Owns (MS); Pete Najarian Owns (NTRS); Pete Najarian Owns (WLT) Call Spreads; Pete Najarian Owns (MEE) Call Spreads; Pete Najarian Owns (FIRE); Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (X)

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 (XLK) For Clients

For Joe LaVorgna
No disclosures

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (GDXJ) Straddles
Accounts Managed By Kanundrum Capital Own (DRYS)
Accounts Managed By Kanundrum Capital Own (AAPL)
Accounts Managed By Kanundrum Capital Own (ARMH)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (RDC)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (TBT)

For 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)




CNBC.com with wires.

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