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Stock Market Road Map Signals Strength into Spring

Tuesday, 3 Jan 2012 | 1:08 PM ET

On Tuesday investors were trying to figure out if 2012 would finally be a big year for the bulls.

If the first day of trading in the new year was any indication, it looks promising.

Both the Dow and the S&P rallied sharply largely after the latest ISM manufacturing index showed the closely watched index rose to 53.9 from 52.7 in November and 50.8 in October.

The increase suggests manufacturing activity and construction spending have picked up. In turn, investors interpreted the results as another sign that the economy was gaining steam.

Optimism Drives Stocks
Stocks rallied Tuesday on growing optimism on the global economy, with Mark Fisher, MBF Index Holdings; Dan Dicker, of Merc Bloc, weighs in on the oil trade, and insight on whether the rally in 2012 soon fizzle, with Andrew Burkly, Brown Brothers Harriman strategist.

As long as economic data trends higher, Andrew Burkly, director of equity strategy research at Brown Brothers Harriman says the S&P should follow along and also trend higher.

“Economic momentum is improving and that should carry the market higher,” he says. Unless prices at the pump spike, Burkly says the S&P marches higher.

OptionMonster Jon Najarian agrees. He thinks the latest ISM data shows a slowdown in Europe won’t have a pronounced impact on Corporate America. “It tells investors that we don’t have that contagion.”

Both pros are looking for strength, but Burkly tells us, the strength will only last until late spring. After that, Burkly anticipate weakness.

“If you look at the past two years, 2010 and 2011, the road map for the stock market has been strong in the first half of the year and then economic momentum starts to fade,” which in turn generates a drag on the market.

Burkley thinks that pattern will remain in tact and should serve as a roadmap as you invest this year.

Top trader Mark Fisher agrees. “Sell in May and go away,” he says.

Trader Joe Terranova sees the market a little differently. Rather than economic data, he says the market will be “all about earnings.” And he expects to see relative strength in corporate results. As a result he's also looking for strength in the second half.

What do you think? We want to know!

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* Lots of strategists are making forecasts but the Fast Money pros were eager to her from Andrew Burkly, director of equity strategy research at Brown Brothers Harriman because he nailed the market last year.

For 2011 he said, the S&P would make high around 1350 in first half of 2011, and that a sell in May strategy would work. He also said look for low in fall, and rally to 1250 by year-end.






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Trader disclosure: On January 3, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova is long (VRTS); Terranova is long (IBM); Terranova is long (LQD); Terranova is long (MUB); Terranova is long (EMC); Terranova is long (CSCO); Terranova is long (AXP); Terranova is long (SBUX); Terranova is long (CSX); Terranova is long (APC); Terranova is long (XOM); Terranova is long (TRLG); Terranova is long (TRLG); Terranova is long (SWN); Terranova is long (V); Terranova is long (SU); Najarian is long (CIGX); Najarian is long (CME); Najarian is long (CBOE); Najarian is long (ANR) call spreads; Najarian is long (AAPL) call spreads; Najarian is long (CNX) call spreads; Najarian is long (CSCO) call spreads; Najarian is long (ACI) call spreads; Najarian is long (GS) call spreads; Najarian is long (RES) call spreads; Najarian is long (DVN) call spreads; Najarian is long (RIMM) call spreads; Najarian is long (MDR) call spreads; Najarian is long (LULU) call spreads

For Brian Kelly o fShelter Harbor Capital
Kelly is long (IWM)

For Mark Fisher of MBF Clearing Corp
* No disclosures

For Dan Dicker of Mercbloc, LLC President
Long Oil futures

For Andrew Burkly of Brown Brothers Harriman
BBH does not act as underwriter, market maker or maintain a proprietary trading book, but it may beneficially own securities covered in this material through various investment funds for which it serves as investment manager and/or sponsor. BBH’s partners and employees may own securities covered in this material and/or may make purchases or sales while this material is in circulation. BBH and its affiliates provide investment banking services, investment management and advisory services, securities brokerage services, and non-securities services. The reader should assume that BBH and its affiliates receive compensation for such services. BBH does not compensate its research professionals based on investment banking transactions. The research professional(s) responsible for preparing this material receive compensation based upon various factors including BBH’s total revenues, a portion of which is generated by investment banking

For Brian Marshall
ISI Group
DISCLOSURE: Neither ISI nor its affiliates beneficially own 1% or more of any class of common equity securities of the subject companies referenced in this Report. No person(s) responsible for preparing this report or a member of his/her household serve as an officer, director or advisory board member of any of the subject companies. Neither ISI nor its affiliates have any investment banking or market making operations. At various times these reports mention clients of ISI from whom ISI has received non-investment banking securities related compensation in the past 12 months.

For Dennis Gartman of The Gartman Letter
Long Canadian dollar, aussie dollar, Long Soybeans
Short Euro, and Japanese Yen

For Rebecca Patterson of JP Morgan Asset Management
* No disclosures



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