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Update: Flurry of New Gadgets to Drive Chip Stocks?

Thursday, 6 Jan 2011 | 6:19 PM ET

On Thursday, while much of the market was focused on weakness in the Dow and S&P 500 , the Fast Money traders were focussed on gains in the semiconductor space, looking to see if these stocks were about to make a run higher.

Although disappointing same-store sales dented hopes about the recovery and energy shares fell with oil prices , chip stocks hit new 52 week highs as the consumer electronics show kicked off in Vegas.

It appears investors are making bullish bets on demand for microprocessors, as the world readies itself for a flurry of new tablet computers, as well as the promise of Internet connected TVs and cars that connect with your smartphone

What’s the trade? How should you position now?

Instant Insights with the Fast Money traders

Guy Adami is bullish Qualcomm, not only for its acquisition of Atheros but also for technical reasons. “$50 had been resistance but now the stock is powering through that level,” he says. “I’m a buyer with a tight stop around $50.50. It speaks volumes that the stock is setting a new 52-week high after a major acquisition like that.”

And on the flip side of the coin Adami thinks Intel is a stock to avoid. “It’s the notable laggard,” he says.

Word on the Street
The Fast Money traders take a look at today's top business stories.

”Intel is just out of favor with investors,” echoes Steve Grasso. "I’d just stay away from that name. I don’t care who they acquire. That name just can’t find buyers in this space.”

”I like Intel as dead money,” adds Jon Najarian. “It works for someone who wants to hold a stock and write covered calls against it.” However Najarian concedes he's much more interested in NVIDIA due to bullish options buying and their move with Microsoft.

Joe Terranova is impressed by all the innovation coming out of CES and how it's generating so much excitement on Wall Street. "I think it's a game changer," he says. NetGear is one of his favorite plays. He also suggets looking at Marvell Technology.

Karen Finerman shares that sentiment. She says, "so much excitement has been generated by CES, that even Microsoft is rallying!" And she adds that big cap tech companies such as Microsoft, as well as Intel and Hewlett Packard are currently cheap. "There is a lot of room for tech blue chips to move and still not be overextended."

Always the contrarian Steve Cortes has his doubts about the strength in the chip stocks. “I’m watching the Nasdaq which isn’t really moving,” he says. That suggests to him we’re seeing capital shuffling rather than new buying .

Anthony Scaramucci shares the caution. He’s worried that we’re in a period of foam and froth and “we could be looking at a period similar to 2000,” he says.

What Does Intel Do Now?
A price target on the chipmaker, with Craig Berger, FBR Capital.

* Hear more about chip stocks from FBR Capital’s Craig Berger. Watch the video now!

** Note: Trader comments above were compiled from both Fast at 5 and the Halftime Report.

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GOLD SITTING ON PRECIPICE

The traders are keeping a close eye on gold , which closed at its lowest level since December 16th and is now approaching a number of key technical levels.

What’s the trade?

Investors will be watching the jobs report looking for more signs of recovery, says Joe Terranova. If they come, I suspect investors will want out of safe haven trades such as gold.

Most of the hedge funds that I track remain long gold, counters Anthony Scaramucci, however they’re hedging their long positions.

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CHRISTMAS TO FORGET

If you were hoping to find new evidence that the recovery had taken hold, don’t look at the latest data out of the retail sector.

Top retailers reported disappointing December sales with many stores forced to slash priced to attract business. Also a post-Christmas blizzard dragged down sales during that critical week after Christmas but before New Year's. (The week after Christmas accounts for 15 percent of seasonal sales.)

Companies ranging from Macy's and Target to teen clothing store American Eagle Outfitters were among those whose results fell far short of Wall Street's forecasts.

"The turbulence is here to stay," says David Bassuk, a managing director at consulting firm AlixPartners. "The consumer is still very sensitive to even slight fluctuations in prices -- the consumer is still looking for deals."

Looking at the numbers more closely, December sales at stores open at least a year for the 28 major retailers tracked by Thomson Reuters rose 3.1 percent, below Wall Street's forecast of a 3.4 percent increase.

In case you're curious, some chains that beat forecasts included department stores J.C. Penney and Dillard's and off-price retailer TJX.

What should you make of it?

These results remind me that retail is a bifurcated market, says Guy Adami. You can’t throw a dart in this space. You have to do your homework. For me the best name to trade is Abercrombie & Fitch.

I’m a buyer of Target , says Steve Grasso. I think the stock was oversold on this news.

I’m long Macy’s, say Karen Finerman I wouldn’t sell on this news. And I’m long Children’s Place.

I’m bullish Limited, says Joe Terranova. The stock hasn’t violated the 200-day in quite some time.




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Trader disclosure: On January 6, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Scaramucci and Skybridge Capital Own (AAPL); Scaramucci and Skybridge Capital Own (BAC); Scaramucci and Skybridge Capital Own (C); Scaramucci and Skybridge Capital Own (DELL); Scaramucci and Skybridge Capital Own (GS); Scaramucci and Skybridge Capital Own (JPM); Scaramucci and Skybridge Capital Own (MON); Scaramucci and Skybridge Capital Own (ARO); Weiss owns (UUP); Weiss owns (TBT); Weiss owns (VZ); Weiss owns (QCOM); Weiss owns (HPQ); Weiss owns (MEE); Weiss is short (GDX); Weiss is short (TCK); Terranova owns (GM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (PEP); Terranova owns (OXY); Terranova owns (GS); Terranova owns (LTD); Terranova owns (GLD) puts; Terranova owns (SLV) puts; Terranova owns (FCX) puts; Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is short (XRT); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman owns (AAPL); Finerman owns (BAC); Finerman's firm owns (BBY); Finerman owns (BP); Finerman's firm owns (BP); Finerman's firm owns (GLW); Finerman's owns (GOOG); Finerman owns (HPQ); Finerman's firm owns (HPQ); Finerman's firm owns (IBM); Finerman owns (JPM) and (JPM) leaps; Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (MSFT); Finerman's firm owns (MSFT); Finerman's firm owns (WMT); Finerman's firm owns (PLCE); Steve Cortes Is Short (LVS). Steve Cortes Is Short (BCS). Steve Cortes Is Short (XRT), Is Long S&P. Cortes Is Short (XHB), Is Long S&P. Steve Cortes Owns (TSN). Cortes Owns (EXC). Steve Cortes Is Long Treasuries. Steve Cortes Is Short Gold. Steve Cortes Is Short Corn. Guy Adami owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU) and (YHOO). Jon Najarian owns (FRO) calls. Jon Najarian owns (AAPL), is short (AAPL) calls. Jon Najarian owns (AEO), is short (AEO) calls. Jon Najarian owns (ARMH), is short (ARMH) calls. Jon Najarian owns (BP), is short (BP) calls. Jon Najarian owns (NVDA), is short (NVDA) calls. Jon Najarian owns (RIMM), is short (RIMM) calls. Jon Najarian owns (WMT), is short (WMT) calls. Jon Najarian owns (VCLK), is short (VCLK) calls. Jon Najarian owns (TWX), is short (TWX) calls; Jon Najarian owns (MIPS); Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (S) and (X).

For Brian Kelly
Accounts Managed by Kanundrum Capital Own (DRYS)
Accounts Managed by Kanundrum Capital Own (FCX)
Accounts Managed by Kanundrum Capital Own (GLD)
Accounts Managed by Kanundrum Capital Own (JPM)
Accounts Managed by Kanundrum Capital Own (MCP)
Accounts Managed by Kanundrum Capital Own (MON)
Accounts Managed by Kanundrum Capital Own (MS)
Accounts Managed by Kanundrum Capital Own (QCOM)
Accounts Managed by Kanundrum Capital Own (WFC)
Accounts Managed by Kanundrum Capital Are Long USD
Accounts Managed by Kanundrum Capital Own (TBT)
Accounts Managed by Kanundrum Capital Are Short The Euro
Accounts Managed by Kanundrum Capital Are Short The Yen

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 (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 (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 (NCRI)
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)

For 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)


For Craig Berger
FBR Capital Markets is a market maker in (NVDA)
FBR Capital Markets is a market maker in (INTC)

For Dennis Gartman
Gartman has no disclosures

For Doug Kass
Kass has no disclosures

For Jon Najarian SOT
Jon Najarian has no disclosures on (INTC)

For Stephen Weiss SOT
Weiss owned (QCOM) on 12/31/2010

For Joe Lavorgna
LaVorgna has no disclosures

For Brian Stutland
Stutland has no disclosures

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CNBC.com and wires

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  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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  • Najarian, the "Pit Boss," is cofounder of optionMONSTER.com, a news site for options traders.

  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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