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S&P 1265 Close Will Either Confirm or Deny Rally

On Monday, money pros were trying to determine if the stock market was about to claw its way to 1350 by the end of the year.

That’s the price target that Thomas Lee, chief U.S. equity strategist at JP Morgan has on the S&P 500 - a level that he thinks is perfectly attainable despite the short time horizon.

”We’ve already seen the market move 100 S&P points in only 8 days this year,” he says. "There's no reason that kind of move can’t happen now."

Though not quite as bullish, “We definitely can trade 1300 by year’s end,” concurs trader JJ Kinahan.

What will the pros be watching to see if the thesis holds?

Trader Steve Grasso says that technicals should tell the story - with the market close on Monday providing a key market tell. ”1265 is the 200 day,” he explains. That’s been a level of strong resistance. If the market closes above that level, that would be a bull sign."

And the bias on the Fast Money desk is bullish.

Our pros think relief will put a floor under the market. They're cheered by positive commentary out of Europe suggesting that French President Nicolas Sarkozy and German Chancellor Angela Merkel have a plan up their collective sleeve - a plan they intend to reveal at an EU summit later this week.

”The fact that Europe is not going to implode should be enough to draw money into the marketplace,” explains Zach Karabell.

As a result, money managers will fear being under invested -- that is they will fear missing the next leg higher, the pros say. "As stocks continue to chug higher the rally should force more investors off the sidelines and into the market."

However, our traders also know one negative headline could deflate the market as if it were nothing more than a big red balloon.

"Of course it's possible that the ECB summit could disappoint," they concede. If that happens, on the downside, "watch 1257 – flat on year and 1249 the Japan bottom,” says Grasso.

However, if you're bias is bullish, the Fast pros suggest putting money to work in bank stocks.

Thomas Lee and trader JJ Kinahan like the big money center banks. They thinks stability in Europe could generate a positive ripple for the real estate market. “And if housing stabilizes banks such as Wells Fargo look attractive,” says Kinahan.

Trader Brian Kelly thinks the regional banks have more torque.

“They’re more leveraged to US economy,” he says. “And at the next Fed meeting coming up on December 13th – I think our central bank will talk about how to get a housing rebound. I’d play it long KRE.”

What do you think? We want to know?

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Trader disclosure: On Dec 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; Grasso owns AKS; Grasso owns AMR; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns BAC; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Kelly is long IWM; Kelly is long EURO; Kelly is long Italian bonds; Kelly is long KRE; Kelly is long Aussie dollars

For Steve Grasso
Stuart Frankel & Co. and its partners own CSCO
Stuart Frankel & Co. and its partners own CUBA
Stuart Frankel & Co. and its partners own GERN
Stuart Frankel & Co. and its partners own GM
Stuart Frankel & Co. and its partners own HPQ
Stuart Frankel & Co. and its partners own HSP
Stuart Frankel & Co. and its partners own HSPO
Stuart Frankel & Co. and its partners own JPM
Stuart Frankel & Co. and its partners own MET
Stuart Frankel & Co. and its partners own MSFT
Stuart Frankel & Co. and its partners own MU
Stuart Frankel & Co. and its partners own NYX
Stuart Frankel & Co. and its partners own PRST
Stuart Frankel & Co. and its partners own RDC
Stuart Frankel & Co. and its partners own UAL
Stuart Frankel & Co. and its partners own WFT
Stuart Frankel & Co. and its partners own XRX

For Patrick Mckeever
No disclosures

For Thomas Lee
No disclosures

For Jens Nordvig
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For Chris King
Verizon Communications, Inc. is on the Stifel Nicolaus Income Opportunity Ideas List. This Income Opportunity Ideas List represents our Stifel Nicolaus analysts’ best yield ideas, however is not intended to represent a model portfolio. Each stock is on the Buy List, and offers what Stifel Nicolaus analysts believe are companies with solid fundamentals, a favorable valuation, and a current dividend higher than that of the S&P 500 Index. Stifel, Nicolaus & Company, Inc. makes a market in the securities of Verizon Communications, Inc.

Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from Comcast Corporation in the next 3 months.

Stifel, Nicolaus & Company, Inc. makes a market in the securities of Sprint Nextel.

AT&T, Inc. is on the Stifel Nicolaus Income Opportunity Ideas List. This Income Opportunity Ideas List represents our Stifel Nicolaus analysts’ best yield ideas, however is not intended to represent a model portfolio. Each stock is on the Buy List, and offers what Stifel Nicolaus analysts believe are companies with solid fundamentals, a favorable valuation, and a current dividend higher than that of the S&P 500 Index. Stifel, Nicolaus & Company, Inc. makes a market in the securities of AT&T, Inc.






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