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Halftime: Is Recovery This Priced In?

Both the Dow and S&P edged lower on Thursday with investors reluctant to take on much more risk before the new year.

Even a series of better-than-expected economic reports couldn’t spark buying activity and the data was clearly bullish.

For example, new U.S. claims for unemployment benefits dropped 34,000 to a seasonally adjusted 388,000, the lowest reading since early July 2008. (That was well below economists' expectations for 415,000.)

The Institute for Supply Management-Chicago's business barometer for the Midwest provided an even more bullish signal. It jumped to 68.6, the highest since July 1988, from 62.5 in November. Economists had expected it to dip. Any reading above 50 indicates the region's economy is expanding.

Is the recovery just this priced in?

Instant Insights with the Fast Money traders

Yes, the recovery is this priced in, says Steve Cortes. The market has come a long way in December. And Europe continues to trade quite precariously. That too is hampering gains in the S&P. I’d take profits.

As far as I’m concerned the Chicago PMI data looked really good, counters Brian Kelly. I don't think this type of recovery is priced in. I’d buy stocks at these level - for the short term - based on this new data. Themes that have worked all year should continue to work. I’m bullish up to 1280 on the S&P.

The sideways action in market probably isn’t bad, adds Patty Edwards. We’re overbought and it makes sense that the S&P would pause. I too am buying – but strategically.

I expect we see a gangbuster January based on these numbers, adds Jon Najarian. From the inputs we're seeing, I have ag as well as hard commodities such as coal on my radar.

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BHP MAY BID FOR ANADARKO

According to published reports, BHP may make a bid for Anadarko , valuing the oil services name at $90 a share.

How should you game it?

I’d play this with options, says Jon Najarian, so you can limit your downside. I’m a buyer of the 80 calls and a seller of the February 85 calls.

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SWISS FRANC HITS A RECORD HIGH

All eyes are on the Swiss Franc with the currency hitting a record high. Is this the ultimate safe haven trade?

What’s the trade?

If you want to play the Swiss franc you can do it with CurrencyShares Swiss Franc Trust , explains Brian Kelly, but personally I wouldn’t touch it. 55% of the Swiss economy is exports and we know other parts of Europe are challenged.

In the space I’d watch US banks versus European banks, says Steve Cortes. I’m short Barclays; most European banks are down in Q4. Also I’m watching BBVA which is trading below $10. When it hits that level, typically we have trouble in Europe.

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ANALYSTS HIT FINANCIALS

The traders are watching the action in Goldman Sachs and Morgan Stanley , Thursday after analysts slammed estimates on both firms citing weak 4th quarter trading.

Are better times for the brokers ahead in January?

I do think January will be better for brokers, especially those with a great deal of commodity exposure, says Jon Najarian.

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BIG TROUBLE IN BIG CHINA?

The latest reports show China’s manufacturing growth hit a three-month low in December, while prices for factory inputs rose in December at their slowest rate in three months.

According to the Wall Street Journal, “the readings could indicate that a series of rate increases and other measures aimed at taming inflation are having some impact.”

What should you make of these developments?

Find out from Donald Straszheim of ISI Group. Watch the video now!



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Trader disclosure: On December 30, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Cortes Is Short (XHB), Is Long S&P; Cortes Is Short (XRT), Is Long S&P; Cortes Owns (TSN); Cortes Is Short (LVS); Cortes Is Short (DB); Cortes Is Short (BCS); Cortes Is Short Gold; Cortes Is Long U.S. Dollar vs. Mexican Peso; Jon Najarian Owns (AAPL), Is Short (AAPL) Calls; Jon Najarian Owns (VZ), Is Short (VZ) Calls; Jon Najarian Owns (MSFT), Is Short (MSFT) Calls; Jon Najarian Owns (IBM), Is Short (IBM) Calls; Jon Najarian Owns (BBY), Is Short (BBY) Calls; Jon Najarian Owns (ADBE), Is Short (ADBE) Calls; Jon Najarian Owns (V), Is Short (V) Calls; Jon Najarian Owns (NXY), Is Short (NXY) Calls; Jon Najarian Owns (WLT), Is Short (WLT) Calls; Jon Najarian Owns (VLO), Is Short (VLO) Calls; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (MS), Is Short (MS) Calls; Jon Najarian Owns (ANR)

PATTY EDWARDS
Edwards Owns (GLD) For Clients
Edwards Owns (SLV) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (GS) For Clients
Edwards Owns (C) For Clients

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDX)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (SWC)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (LYC.AU)
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (BBT)
Accounts Managed By Kanundrum Capital Are Long U.S. Dollars
Accounts Managed By Kanundrum Capital Are Short Euro



CNBC.com with wires.

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S&P 500
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APC
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BBVA
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BARC
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BHP
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FXF
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GS
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MS
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AAPL
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