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Halftime: Beginnings Of Sharp Bank Rally?

The S&P edged higher on Wednesday in what seemed like a quiet day on the surface; but dig down just a little and you may find a market ‘tell.’

The financial sector was the best performing sector in the S&P with BofA and JPMorgan among the best performers in the Dow.

That’s notworthy because the sector has lagged through much of the autumn.

By contrast, Wednesday's strength in banks drove the S&P 500 above 1,255.08, a level last seen in September 2008, before Lehman collapsed and an important psychological barrier for investors.

Has the landscape changed enough for bank stocks - which had been laggards - to become market leaders? Are we at the beginning of a sharp rally in bank stocks?

Instant Insights with the Fast Money traders

Brian Kelly thinks signs are emerging that are bullish for banks. “There’s consolidation in the space, the yield curve is steeper and the latest GDP suggests there’s growth.”

Steve Grasso expects to see further buying with investors reluctant to miss an expected end of year melt up. “Above 1228 in the S&P (technicals suggest) there’s nothing but air until 1275.”

According to Scott Nations of NationShares options investors are bullish, too. "I'm seeing huge volume in March 17 calls in the XLF," he says. That's a bullish bet that the ETF trades above 17.

Chris Mustacio of Stifel Nicolaus has a slew of ideas for investors who want to establish new position in the financials. “Wells Fargo and USB are generating great return on investment yet they trade at low P/E multiples,” he tells the desk.

Or if you want dividend yield, “look at PNC,” he says. However, if you like trades that are higher risk and potentially higher reward, Mustacio says, “Regions , KeyCorp even BofA ,” are (potentially) stocks with juice or beta.”

Steve Cortes just can’t get onboard although he admits he was squeezed out of his BofA short. “I still have a negative opinion of money center banks. I’m suspicious."

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TOPPING THE TAPE: MOTOROLA

Shares of Motorola hit new 52 week highs on Wednesday as the company prepares to split into 2 separate units, its mobile business and its public safety unit.

Motorola Mobility (MMI)Handsets, Cable Set-Top Boxes
Motorola Solutions (MSI) Radios, Public Safety, Networking Gear

What’s the trade?

I got out of my Motorola position because I’m not sure which of these stocks is a buy going forward, says Steve Grasso. I’d wait until January 4th and look at the performance before placing my bets.

I’d go with Mobility as a bet on the Android platform, says Brian Kelly.

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COPPER FINGER

Investors are chattering about copper supplies aftera published report said a single trader owns 80% to 90% of the copper sitting in London Metal Exchange warehouses, equal to about half of the world’s exchange-registered copper stockpile and worth about $3 billion .

What should you make of it?

Of all the industrial metals I think copper has very bullish fundamentals behind it, says Brian Kelly.

I’d play copper with Freeport McMoRan , says Scott Nations. Though copper ETFs may seem sexy investors will have to pay for insurance and storage.

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TRADE UPDATE: U.S. STEEL

Time now for a trade update. Back at the beginning of the month, Steve Grasso highlighted US Steel's outperformance in the month of December.

At the time he said, “If you look back historically over the last three years, Steel has outperformed the S&P (in December). Over the last three years, steel was up 22%, 24%, and 24% respectively while the S&P was basically flat to down 1% during the same period.

Looks like he was right, US Steel is up over 20 percent this month, while the S&P is up about 5 percent.



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Trader disclosure: On Dec. 22, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Scott Nations owns (MSFT), (SPY) and (CME). Steve Cortes owns (TSN). Steve Cortes is short (LVS). Steve Cortes is short (MOS). Steve Cortes is short (XRT) vs S&P 500. Steve Cortes is short Gold. Steve Cortes is short Nat Gas. Steve Cortes is short Wheat. Steve Cortes is short Corn. Steve Cortes is long treasuries. Steve Cortes is long USD vs. Mexican Peso and Canadian Dollar. Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MHY), (NDAQ), (PFE), (PRST) and (S).

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NBC Universal is the parent company of CNBC

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (BBT)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (JJC)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Own (XLE)
Accounts Managed By Kanundrum Capital Own (OIH)
Accounts Managed By Kanundrum Capital Own (ANDE)
Accounts Managed By Kanundrum Capital Own USD
Accounts Managed By Kanundrum Capital Are Short The Euro
Accounts Managed By Kanundrum Capital Are Short The Yen

STEVE GRASSO
Stuart Frankel & Co and its partners own (AAPL)
Stuart Frankel & Co and its partners own (AMGN)
Stuart Frankel & Co and its partners own (BP)
Stuart Frankel & Co and its partners own (CUBA)
Stuart Frankel & Co and its partners own (GE)
Stuart Frankel & Co and its partners own (GERN)
Stuart Frankel & Co and its partners own (HPQ)
Stuart Frankel & Co and its partners own (HSPO)
Stuart Frankel & Co and its partners own (NWS.A)
Stuart Frankel & Co and its partners own (NYX)
Stuart Frankel & Co and its partners own (OPEN)
Stuart Frankel & Co and its partners own (PDE)
Stuart Frankel & Co and its partners own (PFE)
Stuart Frankel & Co and its partners own (PRST)
Stuart Frankel & Co and its partners own (RDC)
Stuart Frankel & Co and its partners own (TLM)
Stuart Frankel & Co and its partners own (XRX)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners own (UNM)
Stuart Frankel & Co and its partners are short (QQQQ)
Stuart Frankel & Co and its partners are short (AAPL)

STEVE GRASSO SOT
Grasso owned (X) on 12/03/2010

GARY MOBLEY
Mobley has no disclosures

CHRIS MUTASCIO
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (CMA)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (CMA)
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (BAC)
Stifel, Nicolaus & Company, Inc. or an affiliate managed or co-managed a public offering of securities for (BAC) in the past 12 months
(BAC) is provided with investment banking services by Stifel, Nicolaus & Company, Inc. or was provided with investment banking services by Stifel Nicolaus or an affiliate within the past 12 months
(BAC) is a client of Stifel, Nicolaus & Company, Inc. or an affiliate or was a client of Stifel Nicolaus or an affiliate within the past 12 months Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (BAC) in the next 3 months
Stifel, Nicolaus & Company, Inc or an affiliate has received compensation for investment banking services from (BAC) in the past 12 months.
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (BBT)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (BBT) in the next 3 months.
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (RF)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (RF) in the next 3 months.
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (STI)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (STI)
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (KEY)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (KEY) in the next 3 months
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (USB)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (USB) in the next 3 months.
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (FITB)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (FITB) in the next 3 months.
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (PNC)
(PNC) is a client of Stifel, Nicolaus & Company, Inc. or an affiliate or was a client of Stifel Nicolaus or an affiliate within the past 12 months
Stifel, Nicolaus & Company, Inc. or an affiliate has received compensation for non-investment banking, securities related services from (PNC) in the past 12 months
(PNC) is provided with non-investment banking, securities related services by Stifel, Nicolaus & Company, Inc. or an affiliate or was provided with non-investment banking, securities related services by Stifel Nicolaus or an affiliate within the past 12 months.
Stifel Nicolaus maintains a business relationship with (WFC)
Stifel, Nicolaus & Company, Inc. makes a market in the securities of (WFC)
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (WFC) n the next 3 months.



CNBC.com with wires.

Symbol
Price
 
Change
%Change
DJIA
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S&P 500
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BAC
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FCX
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JPM MLP ETN
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KEY
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PNC
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RF
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USB
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WFC
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X
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SPDR FIN SEL
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