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Halftime: Did S&P Put in a Bottom at 1260?

On Tuesday, a growing sense of optimism seemed to sweep across the Street with chatter suggesting that the market had just made a significant move.

Jitters about Greece may have been even more of a hurdle for the stock market, than previously reported - and it's been reported a lot!

But signs that a bailout is growing ever more likely, triggered an S&P move that may likely become a key move - at least on a technical basis.

After looking as if the S&P was about to test the all important 200-day moving average of 1260 in the previous session, the optimism triggered buying and S&P 500 bounced higher.

”Price is truth. We tested critical levels and then made advances,” explains OptionMonster Jon Najarian.

And that could set the stage for more momentum to the upside. Again, according to technical analysis, the move may serve as confirmation that 1260 is now the bottom.

”The market clearly looked like it was pointed to the downside,” explains trader Joe Terranova. “But now that it’s made this move – sellers were caught on the wrong side of the trade."

Trader Brian Kelly agrees. “Investors were betting on a Lehman-like event that now seems unlike to happen and they’re caught,” he explains.

Obviously that suggests some of the gains were triggered by short-covering, but largely the traders think the momentum will remain. “I think the rally is sustainable,” Kelly says.

Terranova seems to agree. He adds ‘the right things are leading the market, now, materials , energy and tech .’ In other words, sectors that led the gains earlier this year – are again leading - all considered positive signs - because they're tethered to growth.

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Even the usually bearish Steve Cortes admits “the market is impressive. It’s holding the April low of 1294.” Cortes however, isn’t as enthusiastic as the other traders. “We started this month at 1345. We’re still off 50 points. Before we uncork the champagne we need to get above that level.”

According to trader Jon Najarian, that kind of bullish move may well be in the cards. “The fervor of buying in the market is surprising,” he says. And he notes that the rally leaders such as Priceline, Caterpillar and Apple are again charging higher.

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HOMEBUILDERS HIGHER, HUH?

Shares of homebuilders soared after new data came in better than expected. Although it showed sales of existing homes fell 3.8 percent in May, the drop was not as deep a drop as some had forecast. The results led to speculation that the negative trend may finally be subsiding.

What's the trade?

Trader Brian Kelly is among those traders establishing new positions. "I’m getting in," he says. Kelly is a buyer of Toll Brothers. "Home prices and home affordability are at multi-decade lows," he explains. "And if the Fed does anything they’ll support the housing market."

Joe Terranova is also growing incrementally bullish on the space. "It looks horrendous but I think we’re close to the bottom," he says.

Steve Cortes is on the other side; he's negative on suppliers. "Year over year home prices are down almost 5%. Cemex, Vale and related stocks look vulnerable to me," he says.








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Trader disclosure: On June 21, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (VRTS); Terranova Owns (IBM); Terranova Owns (FCX); Terranova Owns (CVI); Terranova Owns (F); Terranova Owns (AAPL); Terranova Owns (CAT); Terranova Owns (BX); Terranova Owns (HPQ); Terranova Owns (MA); Terranova Owns (PEP); Terranova Owns (MCD); Terranova Owns (JWN); Terranova Owns (TM); Terranova Owns (LULU); Terranova Owns (WFM); Terranova Owns (DAR); Terranova Owns (BJ); Terranova Owns (XOM); Terranova Is Short (DELL); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (MMI) call spreads ; Jon Najarian owns (GS) call spreads; Jon Najarian owns (FDX) call spreads ; Jon Najarian owns (CIGX) call spreads; Jon Najarian owns (UA) call spreads; Cortes Owns (GOOG); Cortes Owns (SVU); Cortes Owns (MS); Cortes Owns (GS); Cortes Is Short Nikkei; Cortes Is Short (BIDU); Cortes Is Short EUR; Cortes Is Short AUD; Cortes Is Short Silver; Cortes Is Short Corn; Cortes Is Short Natural Gas; Cortes Is Short Crude

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 (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd.
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 DOMINO'S PIZZA UK & URL PLC

For Brian Kelly
Accounts Managed By Brian Kelly Capital Are Long the Euro
Accounts Managed By Brian Kelly Capital Own (GLD)
Accounts Managed By Brian Kelly Capital Own (SLV)
Accounts Managed By Brian Kelly Capital Own (MCP)
Accounts Managed By Brian Kelly Capital Own (MON)
Accounts Managed By Brian Kelly Capital Own (INTC)
Accounts Managed By Brian Kelly Capital Own (VLO)
Accounts Managed By Brian Kelly Capital Own (WFC)
Accounts Managed By Brian Kelly Capital Own (FCX)
Accounts Managed By Brian Kelly Capital Own (ATW)
Accounts Managed By Brian Kelly Capital Own (JPM)
Accounts Managed By Brian Kelly Capital Are Short the U.S. Dollar

For Joe LaVorgna
(FDX) is an investment banking client of Deutsche Bank Securities

For Justin Yagerman
(FDX) is an investment banking client of Deutsche Bank Securities




CNBC.com with wires.

Symbol
Price
 
Change
%Change
S&P 500
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CAT
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CEME
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PCLN
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TOL
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VALE'A
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SPDR SP HB
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SPDR MAT SEL
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SPDR NRG SEL
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SPDR TEC SEL
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AAPL
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