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Halftime: Top 3 Cloud Trades for 2011

Tuesday, 14 Dec 2010 | 1:45 PM ET

Cloud computing was one of the hottest trends of 2010 and according to top technology analyst, the trade will continue to reign in 2011.

"Cloud computing is the biggest paradigm shift we've seen in technology in the last 10 to 15 years," said Daniel Ives, an analyst at FBR Capital Markets. "I think a big stepping stone as we move to 2011 is wan optimization, which enables faster more scalable networks."

To play it, Ives recommends these trades:

Top Three Cloud Trades
Daniel Ives of FBR Capital Markets shares his best three cloud computing trades for 2011.

Riverbed Technology : As far as cloud computing goes, Ives said Riverbed is "leader of the pack." Ives expects the San Francisco-based company to continue to dominate and said it's a likely takeover candidate.

Blue Coat Systems : When it comes to wan optimization, Ives said this is a second-tier player. This company is based in Sunnyvale, Calif.

Citrix Systems : This Fort Lauderdale, Fla.-based company also deals in wan optimization.

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NETFLIX FALLS THROUGH KEY TECHNICAL LEVELS

CNBC

Not only did shares of Netflix fall sharply in midday trading Tuesday, Trutina Financial's Patty Edwards said it's breached several key technical levels.

The stock has moved through the 20-day moving average, noted Edwards. It's getting close to the 50-day moving average of $175 a share.

"The problem with stocks like this, that have been such high fliers, is that when they break, they break hard to the downside," noted Edwards. "Your first sale is usually your best sale."

Both Edwards and Joe Terranova of Virtus Investment Partners would avoid this stock right now. Terranova said he'd need to see a fundamental change before buying.

Jon Najarian, on the other hand, remains interested in Netflix. The optionMONSTER.com co-founder would buy shares if it were to fall through the $175 level.

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UNUSUAL ACTIVITY: WHIRLPOOL

From the options market, Najarian said there's unusual activity in Whirlpool. He said the Jan. 90 call volume has spiked and volatility is up by 60 percent, where it would typically be at 30 percent.

It remains to be seen what's driving the sudden interest in the stock . If it's takeover speculation, Edwards isn't sure who'd be interested in acquiring appliance company.

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POPS & DROPS

As stocks moved higher on stronger economic reports on Tuesday, here are the market movers that caught the traders' attention:

Pops (stocks that moved higher)

Amgen (AMGN) popped 3%: Shares of the biotechnology company rallied, as Piper Jaffray upgraded the stock to ‘overweight’ from ‘neutral.' Terranova likes amgen, but didn't say why.

Caterpillar (CAT) popped 2%: The industrial company is still riding the China wave, as its stock hit a new all-time high on Tuesday. Edwards said the global growth story is helping the stock.

Drops (stocks that fell)

Sanderson farms (SAFM) dropped 4%: The poultry producer reported that profit more than doubled in the fourth quarter. Feed costs have been higher than expected, though, said Kanundrum Capital's Brian Kelly. Sanderson is hedged a bit, but he isn't recommending this name right now. He'd rather buy the feed.

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CALL THE CLOSE

Najarian expects the market to close higher.

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Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Edwards agreed, but said it looks like some names are being overbought. She would be careful.

Terranova, on the other hand, said healthcare isn't being overbought.

Kelly likes this market, too. He said if the Fed doesn't do more quantitative easing, that means the U.S. economy is improving and stocks will go higher.

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Trader disclosure: On December 14th, 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 (UPL), (C), (PEP), (OXY), (GS), (NKE), (VRTS): Jon Najarian owns (IBM), is short (IBM) calls; Jon Najarian owns (GS), is short (GS) calls; Jon Najarian owns (GE), is short (GE) calls; Jon Najarian is long (WHR) call spreads; Jon Najarian is long (GS) call spreads; Jon Najarian is long (MS) call spreads; Jon Najarian is long (CME) call spreads; Jon Najarian is long (CBOE) call spreads; Jon Najarian is long (WMT) call spreads; Jon Najarian is long (MSFT) call spreads; Jon Najarian owns (BBY); Jon Najarian is short (FFIV); Jon Najarian is short (RVBD); Jon Najarian is short (APKT)

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For Joe Terranova:
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (ALK)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EPR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (MGRC)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Patty Edwards
Edwards owns (AAPL) for clients
Edwards owns (GS) for clients
Edwards owns (C) for clients
Edwards owns (CME) for clients
Edwards owns (AMZN) for clients
Edwards owns (F) for clients
Edwards owns (MSFT) for clients
Edwards owns (XLK) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (GE) for clients
Edwards owns (GLW) for clients

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (AAPL)
Accounts Managed By Kanundrum Capital Own (WMT)
Accounts Managed By Kanundrum Capital Own (RIMM)
Accounts Managed By Kanundrum Capital Own (HPQ)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (GDXJ) straddles
Accounts Managed By Kanundrum Capital Own (GLD) calls
Accounts Managed By Kanundrum Capital Own (OIH)
Accounts Managed By Kanundrum Capital Own (ANDE)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (POT) calls
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (DE)
Accounts Managed By Kanundrum Capital Own (FXY) puts

For Daniel Ives
FBR Capital Markets is a market maker or liquidity provider in (SYMC)
FBR Capital Markets is a market maker or liquidity provider in (BCSI)
FBR Capital Markets is a market maker or liquidity provider in (CTXS)
FBR Capital Markets is a market maker or liquidity provider in (RVBD)

For Dennis Gartman
Funds managed by Dennis Gartman are long the Australian Dollar
Funds Managed By Dennis Gartman are short the Euro
Gartman was asked and has no disclosures on USD, GLD, and other currencies

CNBC.com with wires.

  Price   Change %Change
CTXS
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NFLX
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RVBD
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WHR
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SAFM
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CAT
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AMGN
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