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Halftime: Pause Before A Larger Pullback?

The S&P edged higher Friday after a week-long sell-off, with investors wondering if the market had found support, or if it was a pause before a larger pullback.

On the bullish side of the equation, the Vix fell sharply suggesting that fear is coming out of the market.

Also, oil looks to have stabilized for now, with Saudi Arabia soothing investor fears by lifting output to fill the gap generated by Libya.However the bears are not without tailwinds. Gold and bond prices rose suggesting riskier assets such as stocks held limited appeal.

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

Instant Insights with the Fast Money traders

Trader Todd Gordon thinks the recent pullback is just the beginning of a larger sell-off.

“The markets really woke up when oil printed $100,” he says.

In other words, the 'unstoppable' momentum higher, in fact stopped.

“And from a technical perspective, he thinks we go a lot lower. "We’ve seen 5-waves to the downside in the S&P," which is illustrated by the chart above. "Corrections are never in just 5-waves,” he explains. “Technically that suggests the market goes lower.”

In fact many market pros expect a correction - some think it will be as steep as 10 percent.

"We got a little bit oversold in a very short period of time this week so it's normal to get this kind of a rebound," says James Dailey, portfolio manager of TEAM Asset Strategy Fund in a Reuters interview.

"The market is likely to bounce a little more, but not too much since there is still more to the downside after such a strong rally and ongoing geopolitical concerns."

Fast trader Brian Kelly shares those concerns. Ahead of the broadcast he tells our producers, “I do not view this as an all clear sign. If it were, bonds would be lower and the dollar would be higher.”

”That being said the most important question investors need to ask is whether or not oil will stay high for a sustained period of time. My view is that it will,” Kelly says.

Independent oil trader Daniel Dicker also expects further gains in oil. “I think the trend is unbroken,” he tells the desk. He’s a buyer of integrated oil with Exxon Mobil his favorite pick. And he’s also bullish Chevron and ConocoPhillips .

Of course, not everyone is skeptical of the market.

Jon Najarian is cautiously bullish. He considers Saudi Arabia’s move to step in and fill the void created by Libya “a good sign.” Going forward, he tells investors to watch both the Vix and the action in crude oil. “If they both go down I think the market goes up.”

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TICK BY TICK - INTEL

Looking at individual names, Intel topped the tape on Friday with the entire chip space all trading sharply higher.

What’s the trade?

"With Morgan Stanley estimating that Apple could sell 100 million iPhones and 40 million iPads in 2011, it's no wonder chips are exploding," says Jon Najarian. "I’d play it long National Semi."

Brian Kelly is more inclined to play the cloud names. "The data center buildout is a way for companies to save money," he says. "Look at Emulex and QLogic .

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CALL OF THE DAY

The traders have Wells Fargo on the radar after Goldman Sachs upgraded the bank to Conviction Buy from Neutral citing improved operating profits as well as both buybacks and dividend increases.

What’s the trade?

Patty Edwards isn't a fan of the big financials, but adds, "If I had to buy something in this space it would be Wells Fargo."


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Trader disclosure: On Feb. 25, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Dan Dicker Owns (XOM), (BHI), (WTF), (APA). Dan Dicker Is Long Oil Through Spreads And Options. Jon Najarian owns (AMD), is short (AMD) calls. Jon Najarian owns (CBOE), is short (CBOE) calls. Jon Najarian owns (CME), is short (CME) calls. Jon Najarian owns (NYX), is short (NYX) calls. Jon Najarian owns (CHK), is short (CHK) calls. Jon Najarian owns (NBR), is short (NBR) calls. Jon Najarian owns (BP), is short (BP) calls. Jon Najarian owns (BRCM), is short (BRCM) calls. Jon Najarian owns (HERO), is short (HERO) calls. Jon Najarian owns (LLTC), is short (LLTC) calls. Jon Najarian owns (NSM), is short (NSM) calls. Jon Najarian owns (V), is short (V) calls. Jon Najarian owns (CRM), is short (CRM) calls. Jon Najarian owns (DECK), is short (DECK) calls. Jon Najarian owns (STI), is short (STI) calls. Jon Najarian owns Corn calls. Jon Najarian owns Wheat calls.

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TODD GORDON
Aspen Trading is short New Zealand dollars and long Swiss Francs

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (IAU)
Accounts Managed By Kanundrum Capital Own (ATW)
Accounts Managed By Kanundrum Capital Own (RDC)
Accounts Managed By Kanundrum Capital Own (AGO)
Accounts Managed By Kanundrum Capital Own (EBAY)
Accounts Managed By Kanundrum Capital Own (TLT)
Accounts Managed By Kanundrum Capital Own Bond Futures
Accounts Managed By Kanundrum Capital Own (DBA)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own Corn
Accounts Managed By Kanundrum Capital Own Wheat
Accounts Managed By Kanundrum Capital Own Soybeans
Accounts Managed By Kanundrum Capital Own Copper
Accounts Managed By Kanundrum Capital Are Long The Euro
Accounts Managed By Kanundrum Capital Are Short USD
Accounts Managed By Kanundrum Capital Are Short The Yen

PATTY EDWARDS
Edwards owns (SPY) for clients
Edwards owns (S) for clients
Edwards owns (XLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (SWN) for clients
Edwards owns (AMZN) for clients
Edwards owns (TTM) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (VZ) for clients
Edwards owns (MSFT) for clients
Edwards owns (C) for clients
Edwards owns (BKCC) for clients
Edwards owns (BMO) for clients
Edwards owns (GE) for clients
Edwards owns (TGT) for clients
Edwards owns (CME) for clients
Edwards owns (FXI) for clients

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