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Guy Adami: Don’t Fade Rally – Market Has Another 30 S&P Handles

Optimism prevailed on Wall Street Monday with sentiment turning positive on new hopes that EU is about to take a big step toward stemming the financial crisis overseas.

And the positive momentum that kicked into gear on Monday afternoon could have some legs.

It could extend all the way into Friday, according to Fast trader Karen Finerman, but for reasons that have more to do with Wall Street than Athens or Berlin.

She believes after the massive outperformance by bonds over the past few months, money managers are likely looking to rebalance into quarter-end, which is Friday. ”I think we see a big reweight out of bonds and into equities,” she says.

In other words, Finerman thinks the market has somewhat of a floor, with more buyers than sellers likely to step into the market.

I don't usually focus on the short-term," she says, "but I think we're seeing a set-up like we did at the end of last quarter - out of fixed income and into equities."

But that's not all.

On top of that Finerman expects to see plenty of window dressing over the next few days as investors gobble up additional shares of their winners in an attempt to make the quarterly statement sent to clients look more impressive.

Joe Terranova agrees with the thesis entirely. He thinks investors are about to find themselves chasing underperformers especially if more positive news comes out of Europe.

“This market wants to reward the underperformers,” he says. The fear will be missing further gains.

As a result, Terranova suggests putting energy, financials, industrials and builders on the radar. "Quarter to date they're all down over 10%," he says.

Guy Adami concurs. “Don’t fade the rally,” he says. “I think it has another 30 S&P handles. I think you can trade with impunity as long as the market holds 1129," he says. “However, he adds, it’s a short–term call. Longer term, I'm bearish."

Adami still expects to see the market test 1020.




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Trader disclosure: On Sep 26, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL); Seymour owns (BAC); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Terranova is long VRTS; Terranova is long OXY; Terranova is long HOS; Terranova is long OIH; Terranova is long CVI; Terranova is long AXP; Terranova is long EMC; Terranova is long WFM; Terranova is long AMZN; Terranova is long WFC; Terranova is long AAPL; Terranova is long IBM; Terranova is long Silver puts; Finerman and Finerman’s firm own AAPL short calls; Finerman owns (BAC) and Finerman’s firm own (BAC) leaps ; Finerman owns GOOG; Finerman’s firm owns IBM; Finerman’s firm owns JPM leaps; Finerman’s firm owns M; Finerman and Finerman’s firm own MSFT; Finerman and Finerman’s firm own ORCL; Finerman owns IWM; Finerman owns MDY; Finerman owns SPY

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