On Monday investors were trying to determine if the market had finally put the worst behind it, with the Dow surging by triple digits, and all but two of the stocks in the S&P 500 trading in positive territory around lunchtime.
Optimism was sparked by new efforts on several fronts to ease Europe's debt crisis. Specifically, published reports suggested thata radical proposal was gaining momentum; one in which countries that use the euro would cede control of a big chunk of their budgets to a central authority.
And another report said the International Monetary Fund was preparing a rescue plan for Italy worth up to 600 billion euros. (The IMF later denied the report. )
Investors interpreted the flurry of headlines as new signs that stability was returning to Europe. How should you position now?
Strategy Session with the Fast Money traders
”This is just a snap back rally,” says a skeptical Stephen Weiss. "I'm not buying." After a 7-day losing streak Weiss believes the market is higher due to seller exhaustion – pure and simple. If you have gains, Weiss says take them.
Looking at the catalysts, Weiss thinks headlines out of Europe aren’t really bullish at all. ”Other nations won’t like Germany and France attempting to run their budgets,” he says. “That's just not going to fly. The bottom line here is that Europe is still without a real solution.”
Trader Pete Najarian agrees that the trade is take profits.
He points to the action in the Vix which didn’t recede to the degree he’d expect, if the market was feeling relief. “With the Vix around 32 there’s still plenty of uncertainty.”
Trader Steve Grasso suggests watching 1205 as the next key technical level. “That’s the 50-day,” he says, and how the market behaves at that level should be informing. "Focus on that and play accordingly."
However, on a modestly bullish note he points out that on Friday the S&P closed at a key technical level, 1155 and that level held. (1155 is a key Fibonacci level - the 50% retracement of the entire up-leg from the Oct 4 low of 1068 to the Oct 27 high of 1289.25.)
If nothing more, holding 1155 suggests the market has a short-term bottom.
Jon Najarian is more bullish. Though he agrees it’s always prudent to take profits he says, “you can’t just dismiss the strength in retail – that wasn’t expected.”
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Trader disclosure: On Nov 28, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss Long EUO; Weiss Long QCOM; Weiss Long NFLX puts; Weiss Long HPQ stock; Weiss Long DE Stock; Weiss Long MDRX stock
For Pete Najarian
Najarian Long AAPL Stock; Najarian Long AKS Calls; Najarian Long C stock; Najarian Long JPM Calls; Najarian Long WFC Calls; Najarian Long INTC stock; Najarian Long YHOO Stock
For Steve Grasso
Long Retailers in Retail Based Hedge Fund
Has positions in AA, AKS, AMR, ASTM, BA, BAC, D, LIT, MHY, PFE, PRST, S, XLU
For Dick Bove
* No Disclosures
For Kimberly Greenberger
Morgan Stanley managed or co-managed public offering in EXPR
Morgan Stanley received compensation for investment banking services from EXPR, LTD,
Morgan Stanley expects to received or seek compensation for products from ANF
Morgan Stanley & Co. LLC makes a market in the securities of Abercrombie & Fitch Co., Aeropostale Inc, American Eagle Outfitters, Inc., AnnTaylor Stores Corp, Chico's FAS Inc., Children's Place Retail Stores Inc., Coach Inc, Express, Inc., Gap Inc, Guess, Limited Brands Inc, Lululemon Athletica Inc., Ross Stores Inc., Skullcandy Inc, Teavana Holdings, Inc., Tiffany & Co., TJX Companies Inc., Urban Outfitters Inc..
Morgan Stanley & Co. International PLC and its affiliates have a significant financial interest in the debt securities of Limited Brands Inc, TJX Companies Inc..
For Jeff Kilburg
* No Disclosures
For Vasily Karasyov
SFG is a market maker in the securities of AMC Networks, Inc. (AMCX), Walt Disney Co. (DIS), Discovery Communications, Inc. (DISCA), DreamWorks Animation SKG Inc. (DWA), Madison Square Garden, Inc. (MSG), Netflix, Inc. (NFLX), News Corp. (NWSA), Time Warner Inc. (TWX), and Viacom, Inc. (VIA/B).
SFG and/or its affiliates beneficially own 1% or more of the securities of Netflix, Inc. (NFLX).
For Neil Doshi
-Firm has received compensation for products and services other than investment banking from ERTS
-ERTS has been a non-investment banking client of Citgroup Global markets over the past 12 months
For Dennis Forst
Firm makes market in WYNN Securities
Expects to receive or seek compensation for investment banking from WYNN
CNBC.com with wires.