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Update: Are Bank Gains Sustainable?

Despite the cold and snow on Wall Street, investors are wondering if things may be heating up in a big way – at least on the trading floor.

On Wednesday, banks stocks closedly sharply higher.

Driving the gains were positive comments made by JPMorgan CEO Jamie Dimon in an exclusive interview with CNBC’s Maria Bartiromo (Click here to see it.) in which he said banks are about two thirds of the way through the housing crisis and that the consumer is 'half repaired'.

Also fueling gains were positive comments on the sector from Wells Fargo, which raised the U.S. bank sector to an "overweight" rating, citing a decline in credit costs and positive loan growth

Wells analyst Matthew Burnell named Bank of America, PNC Financial , Comerica , JPMorgan and Goldman Sachs as top picks.

Are banks stocks on the brink of a big break out? Or are the gains even sustainable?

Instant Insights with the Fast Money traders

OptionMonster Jon Najarian is solidly bullish. He finds Dimon’s commentary particularly encouraging. “I can’t imagine looking to short any of the names,” Najarian says.

Conversely, Guy Adami doesn't see banks sustaining their recent gains. He thinks the current action in the financials is something we used to see pre-Lehman crisis. "That is, financials running up ahead of earnings and selling off in their wake," he says.

Brian Kelly is downright bearish. “I don’t know if Jamie Dimon told us anything we didn’t know. I think a lot of what he said is priced in. If I was long I’d use the rally to take profits. Personally, I’m more interested in shorting banks in the future. The Massachusetts ruling is a tremendous overhang.”

Steve Cortes expects banks to trade higher, but he sees the gains largely tethered to the steeper yield curve. ”Banks seem to be trading in tandem with the yield curve,” he explains. "It’s almost the exact same view. As long as the yield curve stays steep I expect banks get a bid.”

But Cortes doesn’t recommend playing the space with big banks. Instead he says, “I think the play is long Goldman and Morgan Stanley . True to his contrarian nature he explains, “Too many investors are focused on the trading at these firms and not focused enough on their banking revenue. M&A deal flow has been incredible in this new year and I think that continues.”

Patty Edwards tells the desk she’s already long Citi and Goldman, “and I plan to hold these stocks for a while longer but I’m not a believer in most large cap banks.”

And in case you’re wondering how the options pits weigh on all this, Jon Najarian tell us us he’s seeing a lot of bets on Citi to the upside. The volume of Jan 5 calls, Feb 5 calls even April 5 calls suggests to him the stock could have room to run.

Joe Terranova is also focused on Citi. "The stock closed above $5 for the first time since August. "(If it stays above $5) I think we’ll start to see institutional money come into this name," which should drive it higher.

Karen Finerman reminds the desk, she's long JPMorgan. "I’m optimistic that we’re going to see momentum in this name," she says.


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TAKE YOUR POSITION: INTEL

Intel led chip stocks higher on Wednesday, a day ahead of earnings. How should you position?

What’s the chip trade?

In the space I’m a buyer of Qualcomm below $50, says Brian Kelly. And I’d take a look at ARM Holding for a pullback.

Wireless chips names, such as NVIDIA interest me more, says Josh Brown. I think Marvell may play catch up.

Broadcom is also worth putting on the radar, says Joe Terranova.



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Trader disclosure: On January 12, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; 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 (CNQ); Terranova owns (PVH); Terranova owns (CVI); Terranova owns (GLD) puts; Adami owns (AGU); Adami owns (C); Adami owns (BTU); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami's wife works at (MRK); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); 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 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 (TGT); Finerman's firm owns (WMT); Jon Najarian owns (C), is short (C) calls; Jon Najarian owns (JOE), is short (JOE) calls; Jon Najarian owns (NFLX), is short (NFLX) calls; Jon Najarian owns (BBY), is short (BBY) calls; Jon Najarian owns (BP), is short (BP) calls; Jon Najarian owns (CHK), is short (CHK) calls; Jon Najarian owns (PBR), is short (PBR) calls; Jon Najarian owns (GM), is short (GM) calls; Jon Najarian owns (F), is short (F) calls; Jon Najarian owns (AXP), is short (AXP) calls; Jon Najarian owns (AAPL), is short (AAPL) calls; Jon Najarian owns (QCOM), is short (QCOM) calls; Jon Najarian owns (STI), is short (STI) calls; Jon Najarian owns (ARUN), is short (ARUN) calls; Jon Najarian owns (EXPE), is short (EXPE) calls; Cortes is short (LVS); Cortes is short (XRT) vs. S&P; Cortes is short (XHB) vs. S&P; Cortes owns (EXC); Cortes owns (TSN); Cortes owns (SVU); Cortes is short Gold; Cortes owns U.S. Treasuries

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 Brian Kelly
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (GDXJ) straddles
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Own (IPI)
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

For Patty Edwards
Edwards owns (SPY) for clients
Edwards owns (XLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (AMZN) for clients
Edwards owns (F) for clients
Edwards owns (GM) for clients
Edwards owns (TTM) for clients
Edwards owns (V) for clients
Edwards owns (MA) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (VZ) for clients
Edwards owns (MSFT) for clients
Edwards owns (RIMM) for clients
Edwards owns (GS) for clients
Edwards owns (C) for clients
Edwards owns (BMO) for clients
Edwards owns (BCS) for clients
Edwards owns (FXI) for clients
Edwards owns (SYT) for clients
Edwards owns (POT) for clients

For Joshua Brown
Brown owns (AAPL)
Brown owns (AAPL) for clients
Brown owns (AMZN) for clients
Brown owns (BAC)
Brown owns (BAC) for clients
Brown owns (BP) for clients
Brown owns (C)
Brown owns (C) for clients
Brown owns (DBA)
Brown owns (DBA) for clients
Brown owns (DIS) for clients
Brown owns (GE) for clients
Brown owns (GS) for clients
Brown owns (GLD)
Brown owns (GLD) for clients
Brown owns (GOOG) for clients
Brown owns (IWM) for clients
Brown owns (JNJ) for clients
Brown owns (JPM)
Brown owns (JPM) for clients
Brown owns (MOO)
Brown owns (MOO) for clients
Brown owns (MOS)
Brown owns (MOS) for clients
Brown owns (MSFT)
Brown owns (MSFT) for clients
Brown owns (POT)
Brown owns (QCOM)
Brown owns (QCOM) for clients
Brown owns (SBNY)
Brown owns (VZ)
Brown owns (VZ) for clients
Brown owns (WFC)
Brown owns (WFC) for clients
Brown owns (XOM) for clients

For Anthony Scaramucci
Scaramucci and Skybridge Capital Own (GS)

For Dennis Gartman
Dennis Gartman is long March KC Wheat
Dennis Gartman is long soybeans
Dennis Gartman is short the Yen
Dennis Gartman is long the Canadian Dollar
Dennis Gartman is long the Aussie Ddcollar
Dennis Gartman is long gold, short sterling
Dennis Gartman is short the Euro

For Steve Cortes
Cortes is long U.S. Treasuries

For Mike Khouw
Cantor Fitzgerald & Co is a market maker in (GOOG), (AAPL), (IBM)

For Brian Kelly Fast Fire SOT
No disclosures

GE is the parent company of CNBC
NBC Universal is the parent company of CNBC



CNBC.com and wires

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ARM
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BAC
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BRCM
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C
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CMA
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GS
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INTC
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JPM MLP ETN
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MRVL
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MS
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NVDA
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PNC
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QCOM
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SPDR FIN SEL
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