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Does After Hours Action Confirm or Deny Tech Rally?

In the after hours the Fast gang parsed through a slew of earnings reports in an attempt to determine whether or not the bulls were back in business.

On Monday the Dow made a run at the psychologically important 12,000 level adding over 100 points for the first time this year. The last time the Dow crossed 12,000 was June 19, 2008.

But despite two reasonably good earnings reports from Texas Instruments and VMWare, shares sold off. What happened? What must you know?

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AFTER HOURS ACTION: TEXAS INSTRUMENTS

Texas Instruments failed to dazzle Wall Street on Monday with profits only edging past forecasts; also the company gave an outlook for the current quarter that was in line with estimates.

Though the results were solid, the Street was hoping for more and the stock sold off in extended trade.

On a more bullish note, however, the chipmaker did say it's now past a "short and shallow downturn" that hit in the second half of last year.

What should you make of it?

Instant Insights with the Fast Money traders

I think it's a pretty good read through, muses Brian Kelly. CEO Rich Templeton said the fall's downturn now looks "mostly complete" and they've replenished inventories in anticipation of a recovery. The read through for the rest of tech should be good.

I think the play in tech across the board is to wait and see, says Joe Terranova and pick your entry points selectively. Planned or not, I don't like the inventory build. And any little slowdown in Asia presents challenges.

If the stock pulls back, I’m a buyer, says Guy Adami. It’s interesting that the stock pulled back so much despite a reasonable earnings report. Maybe it's just taking a breather, it's up 20% over past 3 months.

Things may not be as bleak as Texas Instruments led us to believe last year, says Tim Seymour. (As you may remember, in October, the company warned that the market was weakening, and that its outlook for this year was cautious.) However, at 13 times I don't see a ton of value here.

Read More:
Texas Instruments Earnings Rise, Top Street's Target

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AFTER HOURS ACTION: VMWARE

After the bell VMware released earnings which showed profits rose sharply on higher sales of the company's virtualization software.

However, shares fell in extended trade with investors disappointed that VMware doesn't expect an expansion of operating margins in 2011.

Priced for perfection at 59 times earnings, VMWare is one of the most expensive stocks out there, says host Melissa Lee.

What’s the trade?

Instant Insights with the Fast Money traders

An unusually high volume of puts traded ahead of earnings, says Jon Najarian. I'm not sure if it was somebody buying protection or if it was a downside bet. But either way it was prudent. Looking at the action, I think the stock could test its November lows.

Once a stock that had so much upside momentum cracks it takes time for it to climb again, adds Joe Terranova. I wouldn't rush in, even if you are bullish.

I think there are more interesting places to put money to work, says Guy Adami. For me it comes back to IBM.

In this space, I like Teradyne, says Brian Kelly.

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AFTER HOURS ACTION: CSX

Also after the close, CSX, one of the largest U.S. railroads, reported quarterly earnings and revenue that beat analysts' forecasts and said it expects record financial results in 2011.

Looking at the numbers, Fourth-quarter earnings rose to $430 million, or $1.14 a share from $303 million, or 77 cents per share a year ago, the Jacksonville, Florida-based company said on Monday.

Revenue grew 21 percent to $2.8 billion. Analysts, on average, expected profit of $1.10 per share on $2.67 billion in revenues, according to Thomson Reuters I/B/E/S.

What’s the takeaway?

If you’re looking for a read-thru for the broad market, I think it’s pretty good, says Brian Kelly. A lot of the strength was due to auto shipments.

If you subscribe to Dow Theory this may signal a pause, counters Tim Seymour. This stock has been a little tired, lately.

In this space I prefer longCNI on any pullback, says Joe Terranova.

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AFTER HOURS ACTION: AMERICAN EXPRESS

Also after the bell, American Express reported a sales improvement for its most recent quarter but turned in a profit forecast for 2011 that was below Wall Street forecasts.

The company also issued new guidance for 2011 to a $5-5.20 range, a disappointment to analysts who have expected $5.25.

What’s the trade?

Because of the regulatory environment, I’d put money to work elsewhere, says Stephen Weiss.

If you can trade it go ahead, says Guy Adami, but American Express is way too volatile if you’re a buy and hold investor.

Read More:
American Express Issues Disappointing Outlook

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BREAKING NEWS: AIG

In breaking news CNBC’s Mary Thompson tells the desk that AIG CEO Robert Benmosche, who has been battling cancer, has received a favorable prognosis and is expected to remain in his position at AIG until his retirement in 2012.

"My doctors have given me an encouraging prognosis as I continue to undergo treatment for cancer," Benmosche said. "As we all know, nothing in life is certain, but given that I've responded very well to my treatment, my doctors believe I can continue to apply the same commitment and energy to AIG over the next twelve to 18 months."

What should you make of it? What’s the trade?

If you must trade this stock, I can only get excited about AIG below $40, says Brian Kelly.

I’d rather play the space with Hartford, says Tim Seymour.

For more click here:
AIG CEO Gets Good Prognosis, Will Stay Until 2012




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Trader disclosure: On Jan. 24, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Terranova Owns (UPL); Terranova Owns (VRTS); Terranova Owns (PVH); Terranova Owns (GM); Terranova Owns (CVI); Terranova Owns (CNQ); Terranova Owns (LTD); Terranova Owns (C); Terranova Owns (PEP); Terranova Owns (CPX); Terranova Owns (ARUN); Terranova Owns (MS); Terranova Owns (RSH); Terranova is short Gold; Weiss owns (UUP); Weiss owns (TBT); Weiss owns (QCOM); Weiss owns (MXIM); Weiss owns (VZ); Weiss owns (WFR); Weiss owns (JPM); Weiss owns (MEE); Weiss owns (BTU); Weiss owns (FAS)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (YGE)
Accounts Managed By Kanundrum Capital Are Long the Euro
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (TER)
Accounts Managed By Kanundrum Capital Own (QLGC)
Accounts Managed By Kanundrum Capital Are Short The Yen
Accounts Managed By Kanundrum Capital Are Short USD

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 Tim Seymour
Seymour has no disclosures

For Jon Najarian
Najarian owns (VMW) puts

For William Power
Robert W. Baird & Co. Incorporated is a market maker in (AAPL), (RIMM), (S), (T) and (VZ)
Robert W. Baird & Co. Incorporated and/or its affiliates expect to receive or intend to seek investment banking related compensation from (AAPL), (RIMM), (S), (T) and (VZ) within the next three months.

For Amelia Bourdeau
Bourdeau has no disclosures

For Mike Khouw
Cantor Fitzgerald & Co is a market maker in (JNPR)
Cantor Fitzgerald & Co is a market maker in (FFIV)

For Gillis/Brown SOT
No disclosures for YHOO on 1/4/11

For Jon Najarian/Joe Terranova SOT
No disclosures for NVDA on 1/10/11

For Fast Fire SOT 12/6/10
Terranova owned UPL on 12/6/10

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