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Pros: Powerful and Positive Sign May Confirm Rally Has Legs

Tuesday, 5 Jul 2011 | 1:45 PM ET

On Tuesday investors were closely watching the action in the Dow and S&P both of which waffled on either side of break even, after putting in the best week in 2-years.

Now investors were searching for signs to determine if stocks had hit a plateau.

Linda Duessel, market strategist at Federated Investors in Pittsburgh, expects the next big move to be lower.In a Reuters interview, she explains that the S&P probably faces tough resistance at 1,350 as bulls try to take the market up toward its recovery high around 1,370.

Duessel is just one of many skeptics; and largely they point to lingering questions about the economy and the financial woes of Europe as two major headwinds. Also trading volumes have been very light, another concerning element - because it calls into question the conviction behind the gains.

Word on the Street Now
CNBC's Herb Greenberg reports Netflix's stock surges on word the company is making inroads into Latin America, and the Fast Money traders weigh in on oil, gold and tech trades to play today.

However the Fast gang 'does' think the rally has legs. Largely Patty Edwards, DocJ, BK and Joey T all see a positive trend emerging that they think could be rather powerful.

A slew of tech stocks including Netflix , Amazon, Dell , IBM, Electronic Arts and DirecTV are all trading at or near multi-year highs. ”This trend is your friend,” says trader Brian Kelly.

He’s a buyer of the market broadly and bullish on the entire tech sector. Patty Edwards largerly agrees. She believes that with so few new jobs being created, companies will drive efficiencies by investing in tech.

Trader Joe Terranova also thinks gains in technology are a good sign for the market. He calls tech a second half story and reminds the desk that new research from Gartner shows “Worldwide IT spending is on pace to grow 7.1 percent in 2011,” while IDC says Corporate America is quickly embracing the ‘cloud.’

He thinks strength in the space is yet another sign that the market is stabilizing.

But Terranova doesn’t only think tech drives the market. He also believes that after the jobs report on Friday, corporate earnings could also generate big flows into the stock market.

If you’re looking for a tech trade, Terranova thinks Apple goes to $400 by year’s end.

Jon Najarian is also optimistic not only due to strength in tech but also because he expects oil to remain range bound between $90 - $100, which in turn should keep prices at the pump under control.

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NETFLIX HITS ALL-TIME HIGH

Among the stocks mentioned above, perhaps none seems to confound investors more than Netflix.

Shares hit an all-time high on Tuesday after the company announced plans to stream TV shows and movies over the internet in Latin America and Caribbean later this year.

What should you make of these developments?

Trader Jon Najarian is a buyer of the stock’s momentum and upward trajectory. “I think the story is as real as its ever been,” he says.

Although trader Joe Terranova full expects the gains unwind someday, he calls the stock a trading story and one in which ‘short sellers can’t be aggressive.’

What do you think? We want to know!

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OIL RISES TO 2-WEEK HIGH

The Fast gang is also closely watching the action in crude, which rallied again on Tuesday on reports of tighter supplies.

What’s the trade?

As mentioned above Jon Najarian expects oil to bounce between $90 - $100. “At $97 I’d take profits,” he says.

Joe Terranova thinks the best way to play energy is with equities. He recommends long positions in – CNQ, Suncor , Halliburton or Occidental .

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GOLD RECLAIMS KEY $1,500

On Tuesday investors bid gold higher with the precious metal again trading above the psychologically important $1500 level.

What’s the trade?

Patty Edwards doesn’t think gold declines anytime soon, simply because retail investors aren’t showing any signs of wanting to sell.

Brian Kelly also suggests gold continues it’s march higher. He believes that as governments of the world ‘change the rules of the game’ more investors will find gold attractive.


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Trader disclosure: On July 5, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian is long (AAPL) calls; Jon Najarian is long (BIDU) calls; Jon Najarian is long (GOOG) calls; Jon Najarian is long (NFLX) calls; Jon Najarian is long (WNR) calls; Jon Najarian is long (UA) calls; Edwards owns (FXC); Edwards owns (XLK)

For Patty Edwards
Edwards is long (HLF) for clients
Edwards is long (AAPL) for clients
Edwards is long (AMZN) for clients
Edwards is long (SYT) for clients
Edwards is long (POT) for clients
Edwards is long (MSFT) for clients
Edwards is long (QCOM) for clients
Edwards is long (GE) for clients
Edwards is long (VZ) for clients
Edwards is long (XLB) for clients
Edwards is long (SPX) for clients
Edwards is long Nasdaq 100 for clients
Edwards is long gold for clients
Edwards is long silver for clients

For Brian Kelly
Accounts Managed by Brian Kelly Capital are long Australian Dollars
Accounts Managed by Brian Kelly Capital are long New Zealand Dollars
Accounts Managed by Brian Kelly Capital are long euros
Accounts Managed by Brian Kelly Capital own (TBT)
Accounts Managed by Brian Kelly Capital own (WFC)
Accounts Managed by Brian Kelly Capital own (KRE)
Accounts Managed by Brian Kelly Capital own (MOS)
Accounts Managed by Brian Kelly Capital own (IPI)
Accounts Managed by Brian Kelly Capital own (XLK)
Accounts Managed by Brian Kelly Capital are short U.S. Dollars

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 (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 DOMINO'S PIZZA UK & URL PLC
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Dennis Gartman
Funds Managed by Dennis Gartman are long canadian dollars, australian dollars, swiss franc, gold, corn, soybeans
Funds Managed by Dennis Gartman are short yen, euro, british pound sterling, copper



CNBC.com with wires.

  Price   Change %Change
DJIA
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S&P 500
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AMZN
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CNQ
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4331
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DTV
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HAL
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IBM
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NFLX
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OXY
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SU
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SPDR TEC SEL
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AAPL
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