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Ahead of End of Year Melt-Up, Buy Oversold Stocks: Najarian

If you’ve been asleep all year and just woke up, it hasn’t been such a bad year. The S&P is up year to date.

But chances are you’ve been wide awake and whipsawed by all the volatility in the market. You probably find it hard to forget the market was down 15% on the year only two months ago - in October.

However, as trader Guy Adami so often says, price is truth – and the truth for investors is that as of Friday, the market had pushed above 1257 –flat on year. That makes the S&P positive for 2011.

The question becomes, will the S&P continue to quietly drift higher, now that it's above 1257.

“The level I’m watching now is 1266,” says Steve Grasso. “Those are the intra-day highs from around December 5th.” Can we get above that level?

Trader Stephen Weiss thinks we can. “I expect to see the S&P continue to drift higher into the end of the year,” he says.

To support his thesis, Weiss points to gains in the market despite higher yields in Italy’s bonds. That would suggest the US market isn’t as focused on Europe as it had been.

Trader Brian Kelly agrees. “The market seems to be shrugging off bad news – that’s bullish,” he says.

Looking at the domestic economy, there may be every reason for the market to rally -- new U.S. single-family home sales rose to a seven-month high in November and the supply of houses on the market was the lowest in 5-1/2 years, adding to signs of a budding recovery in the sector.

All things considered trader Dan Dicker thinks, if you’re nimble the next handful of sessions may present opportunity. “I wouldn’t do anything big, but I think you can take advantage of the trend with some day trades.”

Looking for ideas? Trader Jon Najarian suggests looking at stocks that may have been oversold due to tax loss selling. “I’d look at Chico's – a stock that has been beaten up – and also Research In Motion,” he says. “In both, the selling looks overdone to me.”

What do you think? We want to know!

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Trader disclosure: On Dec 23, 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 owns WLP; Weiss owns EUO; Weiss owns NIHD; Dicker owns CHK; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Najarian is long; Najarian is long MOS call spreads; Najarian is long AAPL call spreads; Najarian is long HSBC call spreads; Najarian is long VMW call spreads; Najarian is long CHS call spreads; Najarian is long RMBS call spreads; Najarian is long Long CIGX; Najarian is long CBOE; Najarian is long CME

For Steve Grasso
Stuart Frankel & its partners own CSCO
Stuart Frankel & its partners own CUBA
Stuart Frankel & its partners own GM
Stuart Frankel & its partners own GERN
Stuart Frankel & its partners own GM
Stuart Frankel & its partners own HPQ
Stuart Frankel & its partners own HSPO
Stuart Frankel & its partners own MSFT
Stuart Frankel & its partners own MU
Stuart Frankel & its partners own NEM
Stuart Frankel & its partners own NYX
Stuart Frankel & its partners own PRST
Stuart Frankel & its partners own RDC
Stuart Frankel & its partners own UAL
Stuart Frankel & its partners own XRX

For Brian Kelly
Shelter Harbor Capital is long KRE
Shelter Harbor Capital is long IWM
Shelter Harbor Capital is long ITUB
Shelter Harbor Capital is long BBD
Shelter Harbor Capital is short ESS
Shelter Harbor Capital is short CPT
Shelter Harbor Capital is short MAA
Shelter Harbor Capital is short UTX
Shelter Harbor Capital is short UBS
Shelter Harbor Capital is short CS
Shelter Harbor Capital is short BCS
Shelter Harbor Capital is short BRITISH POUND
Shelter Harbor Capital is short YEN
Shelter Harbor Capital is short SWISS FRANC

For George Davis
No disclosures

For Tim Winter
AMERICAN WATER WORKS CO INC I, Timothy Winter, CFA hereby certify that the views expressed in this report accurately reflect the analyst's personal views about the subject companies and their securities. I have not been, and will not be receiving direct or indirect compensation for expressing the specific recommendation or view in this report. Our affiliates beneficially own on behalf of their investment advisory clients or otherwise less than 1% of the common stock of AMERICAN WATER WORKS CO INC as of October 31, 2011.

For Edward Williams
ATVI – BMO Capital Markets makes a market in this security
ERTS - BMO Capital Markets makes a market in this security.
GME - BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months. This issuer is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO CM Ltd. or an affiliate within the past 12 months: Non-Securities Related Services.

For Taposh Bari
Jefferies & Company, Inc makes a market in the securities or ADRs of Finish Line.

For Jeff Fidacaro
SFG is a market maker in the securities of Apple Inc. (AAPL).
SFG and/or its affiliates beneficially own 1% or more of the securities of Apple Inc. (AAPL)
Susquehanna International Group, LLP (SIG) is comprised of a number of trading and investment related entities under common control, including Susquehanna Financial
Group, LLLP (SFG). SIG, its affiliates and/or its principals may have long or short positions in securities or related issues mentioned here. SIG, in its capacity as specialist and/or market maker may execute orders on a principal basis in the subject securities. Information presented is from sources believed to be reliable, but is not guaranteed to be accurate or complete. Past performance should not be taken as an indication or guarantee of future results. Hyperlinks provided in this report are for your convenience. Please be aware that the products and information supplied on these hyperlinked pages are not endorsed or approved by SFG.

For Paul Walsh
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