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Jon Najarian: Massive Short Squeeze Likely to Drive Next Move

Friday, 5 Aug 2011 | 2:01 PM ET

On Friday, new developments critical to investors began to unfold at such great speeds, even the most nimble pros struggled to keep from becoming dizzy.

At the open, stocks gained after the all-important jobs reports came in better than expected cheering an otherwise gloomy Wall Street.

But pessimism quickly resumed its stranglehold over the market, with stocks paring gains and trading sharply lower as fears about the financial crisis in Europe took center stage.

But then, like a good drama with a surprise ending, stocks surged higher after a major development out of Europe blindsided the bears and threatened to change the game.

Around 1pm ET, the ECB said it would buy the debt of Italy and Spain if both nations agreed to structural reforms. And that’s a game changer, according to Fast Money pro and OptionMonster Jon Najarian.

”It’s huge – it says to the markets that the ECB is prepared to monetize the debt of big members of the EU. In other words it will stand behind these (debt) promises - it will provide a backstop,” he says. “This could stem the fear in the stock markets of the world.”

And the other Fast Money pros largely agree that these developments could change the tenor of the market.

”We could rally as much as 2%,” says trader Steve Grasso.

Najarian goes on to say, he thinks ECB decision to buy debt is the final prong that puts a floor under the market.

“It’s playing out exactly to (their) plan,” he says. In order to achieve capitulation, “Bulls needed to see blowout volume. They got that. They needed to see a massive selloff. The market was down triple digits. All the pieces are coming together."

"Investors might be nervous into the close but it might be nervous shorts for a change."


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Digging down into the market, shares of LinkedIn landed on the trader radar after the company issued a surprise profit after quarterly revenue more than doubled as the professional networking site sets off to prove it can fulfill the promise of its splashy IPO and rich valuation.

Excluding certain items, LinkedIn earned 4 cents a share, outstripping forecasts for a loss of 3 cents a share, according to Thomson Reuters. Net income rose slightly to $4.5 million from $4.3 million a year earlier.

Revenue more than doubled to $121 million, surpassing an average forecast of $104.73 million according to Thomson Reuters.

In particular, revenue from helping companies hire employees — which makes up the bulk of the social network's business — surged 170 percent to $58.6 million, racing past expectations.

Those results sound impressive so why does Ken Sena of Evercore think LinkedIn it’s a $70 stock. Get all the details. Watch the video now!





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Trader disclosure: On Aug 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; Steve Grasso owns (AMD); Steve Grasso owns (ASTM); Steve Grasso owns (BA); Steve Grasso owns (BAC); Steve Grasso owns (C); Steve Grasso owns (D); Steve Grasso owns (JPM); Steve Grasso owns (LIT); Steve Grasso owns (LPX); Steve Grasso owns (LVS); Steve Grasso owns (MAR); Steve Grasso owns (MHY); Steve Grasso owns (NDAQ); Steve Grasso owns (PFE); Steve Grasso owns (PRST); Steve Grasso owns (UAL); Steve Grasso owns (XHB); Steve Grasso owns (XLB); Steve Grasso owns (XLI)

Brian Kelly
Accounts Managed By Brian Kelly Capital Own (TLT) calls
Accounts Managed By Brian Kelly Capital Own (GLD) calls
Accounts Managed By Brian Kelly Capital Own (SLV) calls
Accounts Managed By Brian Kelly Capital Own (VIX) calls
Accounts Managed By Brian Kelly Capital Own (SPY) puts
Accounts Managed By Brian Kelly Capital are short the Euro
Accounts Managed By Brian Kelly Capital are short the Swiss Franc

Patty Edwards
Edwards Owns (AMZN) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (QCOM) For Clients
Edwards Owns (PM) For Clients
Edwards Owns (KO) For Clients
Edwards is double short (SDS) For Clients
Edwards is long Gold For Clients
Edwards is long Silver For Clients
Edwards owns (PM)
Edwards owns (FXC)

For Steve Grasso
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MET)
Stuart Frankel & Co and it’s partners own (MSFT)
Stuart Frankel & Co and it’s partners own (YHOO)
Stuart Frankel & Co and it’s partners own (RHT)
Stuart Frankel & Co and it’s partners own (MET)
Stuart Frankel & Co and it’s partners own (MU)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (UAL)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners are short (QQQQ)

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