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France Downgrade Presents 'Good' S&P Buying Opportunity

* This post was updated after the S&P downgrade became official after the bell.

Again a seriously negative headline out of Europe has wrested attention away from US corporate earnings and toward overseas financial woes.

Although chatter of a France downgrade had been talked about in the market since early December, on Friday the rumor become reality.

In the morning published reports suggested a downgrade was imminent and then after the bell, S&P not only downgraded France but they also downgraded several other European countries including Italy, Spain and Portugal. (It’s important to note they did not downgrade Germany.)

Ahead of the 'official' downgrade the S&P 500 and Dow whooshed lower – and the Fast pros thought the sell-off presented a good buying opportunity.

“It’s already priced into the market,” says trader Jon Najarian, referring to the one notch downgrade of France.

To confirm his thesis, Najarian points to the Volatility Index. “The Vix popped on the news but then pulled back. It’s still a very low number – institutional investors are not scared –they’re still in,” he says.

Trader Zach Karabell agrees entirely. “Real world impact from the France downgrade will be about the same as the S&P downgrade of US debt in July – zero.

And Karabell says that fully aware that there could be other negative headlines; negotiations between Greece and the banks to whom they owe money have halted – and it’s more likely Greece is looking at an involuntary debt reduction rather than a voluntary one – which would trigger credit default swaps.

But despite the potential tape bombs Karabell says, “The market is prepared for things to get worse. I think we’re less prepared for the markets to shrug off bad news out of Europe and move with the strength of earnings up toward 1350.”

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In other words the risk is missing a move higher.

The usually cautious Patty Edwards shares the optimistic outlook. “On the pullback I’m legging into dividend payers,” she admits. “I don’t want to take a lot of risk but I want to be in the market,” she says.

Trader Steve Grasso is more skeptical. “My bias is lower,” he says.

Grasso thinks the market is again about to test 1275, which was the Egypt bottom. If it holds it should be considered support but he doesn’t think it will – and if it doesn’t hold, 1275 it will become resistance.

“Frankly I’m shocked by the support we’re seeing,” he says. “My bias is lower, I think we go back down to 1200, but I do think a lot of it is already price in.”

What do you think? We want to know!

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Trader disclosure: On Jan. 13, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian owns AAPL; Najarian owns BAC; Najarian owns GS; Najarian owns BCS; Najarian owns TXT; Najarian owns URBN; Najarian owns INTC; Najarian owns CMC; Najarian owns FSLR; Najarian owns WYNN; Najarian owns DHI; Najarian owns LEN; Najarian owns WLT; 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 WFT; Grasso owns XLU; Edwards is long PM; Weiss is long EUO; Weiss is short FXA;

Steve Grasso
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own CUBA
Stuart Frankel & Co and it’s partners own GERN
Stuart Frankel & Co and it’s partners own HPQ
Stuart Frankel & Co and it’s partners own HSPO
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own NYX
Stuart Frankel & Co and it’s partners own PRST
Stuart Frankel & Co and it’s partners own WFT
Stuart Frankel & Co and it’s partners own XRX

Patty Edwards
Trutina Financial is long PM
Trutina Financial is long C
Trutina Financial is long GLD
Trutina Financial is long MSFT
Trutina Financial is long INTC
Trutina Financial is long AMZN
Trutina Financial is long EBAY

Colin Gillis
Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Google within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Google.
Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for eBay within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from eBay.
Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Microsoft within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Microsoft.

Dan Ives
FBR acts as a market maker or liquidity provider for the company's securities: NUAN.

Gerard Cassidy
A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services from JPMorgan Chase & Co. in the past 12 months
A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities for JPMorgan Chase & Co. in the past 12 months
RBC Capital Markets, LLC makes a market in the securities of JPMorgan Chase & Co. and may act as principal with regard to sales or purchases of this security
RBC Capital Markets is currently providing JPMorgan Chase & Co. with non-securities services
RBC Capital Markets has provided JPMorgan Chase & Co. with investment banking services in the past 12 months.
RBC Capital Markets has provided JPMorgan Chase & Co. with non-investment banking securities-related services in the past 12 months
RBC Capital Markets has provided JPMorgan Chase & Co. with non-securities services in the past 12 months
A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other than investment banking services from JPMorgan Chase & Co. during the past 12 months. During this time, a member company of RBC Capital Markets or one of its affiliates provided non-investment banking securities-related services to JPMorgan Chase & Co
A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other than investment banking services from JPMorgan Chase & Co. during the past 12 months. During this time, a member company of RBC Capital Markets or one of its affiliates provided non-securities services to JPMorgan Chase & Co..




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