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Halftime: Nasdaq Nears 10-Year Highs, Sign of Top?

Friday, 18 Feb 2011 | 1:30 PM ET

The S&P edged higher Friday with bulls looking to end the session with their third straight week of stock market gains.

However the Fast traders were much more interested in tech; especially after Brocadetopped estimates and forecast second-quarter profit above expectations.The results were particularly noteworthy because Brocade competes with Cisco and other network equipment makers; and as you may remember Cisco shocked tech investors with low margins and a weaker-than-expected outlook, when it reported last week.

Lately, valuations in tech have been called into question, in part because chip stocks have been on fire since December and also because the tech heavy Nasdaq is flirting with its highest level in 10 years.

Is it a sign of the top? Or does tech have room to run?

Instant Insights with the Fast Money traders

Joe Terranova believes technology will end 2011 as the big winner; he's bullish. He likes betting on a few fundamental themes. One of them is content delivery. “You used to have to go get the content but now it comes to you,” he says. “Play that long Aruba.

Also he suggests gaming tech with companies that benefit from smart phone and tablet growth; “names such as Broadcom and Qualcomm ,” he adds

And as a software play he recommends Success Factors .

The Word on the Street Now
The Fast Money traders share their midday stock picks.

If you don’t have a longer-term time horizon, (that is you can’t hold through year’s end) Terranova concedes, “valuations look stretched.” However, he thinks the trade right now is all about momentum and “momentum is to the upside. I’d stay with it and raise my stops,” he counsels.

Jon Najarian agrees with Terranova’s long-term outlook. “I don’t see a reason for the stocks to stop working.”

And on Thursday’s Fast Money he says, "People around the world want technology. I just see demand rising for smartphones and tablets for a long time to come.”

Steve Grasso is a little more cautions. He'd avoid the tech blue chips in favor of newer tech names. “I’m seeing clients rotate out Cisco, Microsoft and Intel the old leaders,” he says. “However, they’re rolling into NVIDIA and Micron even at these valuations.”

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ROUGH WEEK FOR THE KING OF TECH: APPLE

Apple stock ticked down from record highs this week on concerns over Steve Jobs' health as well as reports of a cheaper iPhone model that could pressure margins.

And on Friday reports suggest DOJ officials had Apple on the radar concerning how it allows media companies to sell its content through its devices.

How should you position?

$348 had been resistance and now it should be support, says Joe Terranova. I’d play long with a stop at $348

I’m a buyer of Apple but on significant dips, says Jon Najarian.

Around $320 I’d also lock and load, says Steve Grasso.

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OIL

The traders also have crude on the radar as protests intensified in Bahrain; both Brent and WTI posted gains.

What’s the trade?

Joe Terranova suggest playing the space with the energy equity names. "Occidental , Exxon and ConocoPhillips
are all working right now," he says.

Steve Grasso is on the other side of that trade. "I think energy is overdone and overextended," he says. "The first thing to go are the high beta plays. I’d stay away from refiners. And I wouldn’t even be all in with coal and steel."



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Trader disclosure: On Feb. 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova Owns (VRTS), (C), (UPL), (GM), (MS), (SLXP), (TEVA), (BAX), (CVI), (RSX), (SU) and (CNQ). Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MT), (MHY), (NDAQ), (PFE), (PRST) and (S). Jon Najarian owns (AKAM), is short (AKAM) calls. Jon Najarian owns (AXL), is short (AXL) calls. Jon Najarian owns (CSTR), is short (CSTR) calls. Jon Najarian owns (JNPR), is short (JNPR) calls. Jon Najarian owns (NBR), is short (NBR) calls. Jon Najarian owns (RSH), is short (RSH) calls. Jon Najarian owns (SVU), is short (SVU) calls. Jon Najarian owns (SWY), is short (SWY) calls. Jon Najarian owns (X), is short (X) calls. Jon Najarian owns (CAT), is short (CAT) calls. Jon Najarian owns (AMD), is short (AMD) calls. Jon Najarian owns (BBY), is short (BBY) calls. Jon Najarian owns (CME), is short (CME) calls. Jon Najarian owns (CBOE), is short (CBOE) calls. Jon Najarian owns (GNW), is short (GNW) calls. Jon Najarian owns (NYX), is short (NYX) calls. Jon Najarian owns (NVDA), is short (NVDA) calls. Jon Najarian owns (V), is short (V) calls. Jon Najarian owns (WMT), is short (WMT) calls. Jon Najarian owns (ARUN), is short (ARUN) calls. Jon Najarian owns (RIMM), is short (RIMM) calls. Jon Najarian owns (GS), is short (GS) calls. Jon Najarian owns (SPWRA), is short (SPWRA) calls

Comcast Is The Parent Company Of CNBC
Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC

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 (NRCI)
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 (XLF)
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 (DPUKF)

PATTY EDWARDS
Edwards owns (SPY) for clients
Edwards owns (XLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (BA) for clients
Edwards owns (AMZN) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (GOOG) for clients
Edwards owns (VZ) for clients
Edwards owns (MSFT) for clients
Edwards owns (C) for clients
Edwards owns (GE) for clients
Edwards owns (TGT) for clients
Edwards owns (CME) for clients
Edwards owns (JWN) for clients
Edwards owns (PEP) for clients
Edwards owns (FXI) for clients

STEVE GRASSO
Stuart Frankel & Co and its partners own (ABX)
Stuart Frankel & Co and its partners own (ABT)
Stuart Frankel & Co and its partners own (AMGN)
Stuart Frankel & Co and its partners own (CSCO)
Stuart Frankel & Co and its partners own (CUBA)
Stuart Frankel & Co and its partners own (GERN)
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 (PFE)
Stuart Frankel & Co and its partners own (PRST)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners own (XRX)
Stuart Frankel & Co and its partners own (SDS)
Stuart Frankel & Co and its partners are short (QQQQ)
Stuart Frankel & Co and its partners are short (AAPL)
Stuart Frankel & Co and its partners are short (TIF)

GORDON JOHNSON
Johnson has no disclosures

BRIAN STUTLAND
Stutland is short (MOS) puts
Stutland owns (NEM), is short (NEM) calls
Stutland Equities is a market maker in VIX futures and options holding positions

CNBC.com with wires.

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