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Latest String of Economic Reports May Compel Buying

On Tuesday, Wall Street bulls were starting to feel that their convictions had been validated as the S&P hit a five-month high.

“I’m a buyer of the market,” says optimistic Fast Money trader Joe Terranova.

Like his bullish brethren, he argues that it’s a mistake to ignore the string of positive indicators that have flooded the Street over the past few days. “Take last week’s unemployment report – or Monday’s comments from Aloca,” he says.

After the bell on Monday, aluminum giant Alcoa posted revenue that topped expectations and CEO Klaus Kleinfeld gave a generally positive assessment of the overall market, forecasting a 7% rise in global aluminum demand this year. Also he reiterated global demand should double by 2020 in part due to demand for more cars and planes.

Meanwhile,. the latestISM manufacturing index released last week showed the closely watched index rose to 53.9 from 52.7 in November and 50.8 in October. That increase suggested manufacturing activity and construction spending had picked up.

All told, Terranova thinks the path of least resistance is higher.

He believes that the string of positive reports all but compel money managers to hit the buy button; that 's because money pros were cautious into year’s end and the recent S&P gains create a fear of being under-invested and missing the next leg higher.

“I’m not saying all in,” adds Terranova. "I want to see Treasurys above 2% (to signal rotation out of bonds and into equities), but energy and financials are working – I’d play them long.”

Trader Zach Karabell agrees. “I’d also trade with a long bias,” he says. Karabell points to the gains in Caterpillar as a kind of global bellwether. Although Karabell concedes global growth may be slowing – it’s by no means stopping.

"Materials have been one of the weaker areas, so values are quite extraordinary if you believe the recovery is going to drive prices higher," adds Robert Lutts, president and chief investment officer at Cabot Money Management in a Reuters interview.

Fast trader Steve Cortes, however, is on the other side.

He says that some of the tailwinds in the market stems from China’s slowing growth. New economic data showed China’s December import growth fell unexpectedly.

“Right now the market considers bad news out of China to be good news because it makes easing more likely,” he says. “but ultimately bad news is bad news.”

What do you think? We want to know!

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Trader disclosure: On Jan. 10, 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 owns APC; Terranova owns OXY; Terranova owns XOM; Terranova owns VRTS; Terranova owns IBM; Terranova owns CSCO; Terranova owns AXP; Terranova owns SBUX; Terranova owns CSX; Terranova owns SWN; Terranova owns AXP; Karabell is long AAPL; Karabell is long XLF; Karabell is long IBM; Rivertwice is short AA; Karabell is long FCX; Karabell is long calls GOOG; Karabell is long calls AMZN; Cortes is long SO; Cortes is long XLU; Cortes is short Corn; Cortes is short Wheat; Cortes is short Crude; Cortes is short XRT; Cortes is short IYT vs. S&P long; Cortes is short QQQ;

Zachary Karabell
Rivertwice has short puts GS;

Patty Edwards
Trutina Financial is long QCOM
Trutina Financial is long INTC
Trutina Financial is long GLD
Trutina Financial is long PGM
Trutina Financial is long AA
Trutina Financial is long YUM
Trutina Financial is long MCD
Trutina Financial is long BMY
Trutina Financial is long JNJ
Trutina Financial is long AMZN
Trutina Financial is long AAPL
Trutina Financial is long GWW

Michael Pachter
No disclosures

Dan Dicker
Dicker is long oil futures and short call options

Dr. Anthony (Tony) Coles
No disclosures

Mike Vorhaus
No disclosures

George Davis
No disclosures

Deborah Weinswig
Gregory Hertz, CFA, CPA, Associate, holds a long position in the securities of Wal-Mart Stores Inc.
Leo Kulp, CFA, Analyst, holds a long position in the securities of Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of JC Penney Co Inc. This position reflects information available as of the prior business day.
Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of Dollar General Corp., Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12 months from Dollar General Corp., Kroger Co, Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or its affiliates expects to receive or intends to seek, within the next three months, compensation for investment banking services from Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Safeway Inc, SUPERVALU INC, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp in the past 12 months.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as investment banking client(s): Dollar General Corp., Kroger Co, Wal-Mart Stores Inc.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities-related: CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Safeway Inc, Saks Inc, SUPERVALU INC, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non-securities-related: CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Safeway Inc, SUPERVALU INC, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp.
Citigroup Global Markets Inc. or an affiliate received compensation in the past 12 months from Dollar General Corp..
Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability which includes investment banking revenues.
The Firm is a market maker in the publicly traded equity securities of CVS Caremark Corp, Costco Wholesale Corp.

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