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Playing The Next Big Move in the Market

Monday, 2 Jul 2012 | 7:22 PM ET

On Monday, the Fast pros reacted to recent buzz about the various year-end targets on the S&P 500, including a revised target from Goldman Sachs released last month. They also talked about how the markets digested Monday’s dismal ISM manufacturing report, which showed contraction for the first time in two years.

Those fears, coupled with hopes for further stimulus from the Federal Reserve, sent the markets narrowly mixed into the close.

How should you position now?

Strategy Session with the Fast Money traders

Dan Nathan, the editor and co-founder of RiskReversal.com, believes the S&P trades lower. “It most certainly [will go] down,” he said. Nathan thinks the next move in the S&P will be generated by U.S. economic data and earnings, which he expects to come in weaker than expected. “This is very much a U.S. story,” he said. “We got some of the European issues — at least in the meantime — out of the way, and now we’re focused on a lot of data in the U.S. — and all of it looks pretty bad.”

Chief Market Strategist for Virtus Investment Partners Joe Terranova sees the market very differently. He thinks stocks are cheap and doesn't see how the S&P can possibly trade a lot lower given the current multiple of about 13.5. "You'd have to see negative earnings growth, not just in the quarter ahead but for many quarters to come for the S&P to drop sharply."

Others like Brian Kelly, founder of Shelter Harbor Capital, said the next move in the market is all about what comes next from central banks. “Now you have the hope rally, the hope of QE, the hope of China stimulus and the hope that the ECB will come in,” he said.

Pete Najarian of OptionMonster says if you're a trader pay attention to the VIX, Wall Street's fear index, which has been trading at elevated levels but more recently has pared gains. "Let that inform your trades," he says, suggesting that with less fear in the market, the path of least resistance is probably higher.


Posted by CNBC's Kirsten Chang

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Trader disclosure: On July 2, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Dan Nathan is long BAC; Dan Nathan is long C; Dan Nathan is long JPM; Dan Nathan is long XLF; Dan Nathan is long IBM; Dan Nathan is long WMT; Dan Nathan is long RIMM; Dan Nathan is long SBUX; Dan Nathan is long BAC JULY 6 PUTS; Dan Nathan is long C JULY 28/25 PUT SPREAD; Dan Nathan is long JPM JULY 32/28 PUT SPREAD; Dan Nathan is long XLF JULY 14/12/10 PUT FLY; Dan Nathan is long IBM JULY 190/180 PUT SPREAD; Dan Nathan is long WMT JULY 67.50 PUTS; Dan Nathan is long RIMM JAN 20 CALLS; Dan Nathan is long SBUX AUG 50/45; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long USB; Joe Terranova is long TCBI; Joe Terranova is long SBUX; Joe Terranova is long MNST; Joe Terranova is long PXD; Joe Terranova is long WFM; Joe Terranova is long NXPI; Joe Terranova is long NKE; Joe Terranova is long UPL; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long LPX; Pete Najarian is long AAPL; Pete Najarian is long AAPL CALLS; Pete Najarian is long BAC CALLS; Pete Najarian is long C; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long NKE CALLS; Brian Kelly is long QQQ; Brian Kelly is long TLT; Brian Kelly is short British Pound

For Dennis Gartman
Dennis Gartman is long GOLD in EURO and YEN terms

For Brian White
Nothing to Disclose

For Scott Nations
Scott Nations is long SPY
Scott Nations is long BAC
Scott Nations is long C
Scott Nations is long JPM

For Mark Newton
Mark Newton is long AAPL
Mark Newton is long LULU

For Joe Lavorgna
Nothing to Disclose

For Amelia Bourdeau
Nothing to Disclose




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  Price   Change %Change
S&P 500
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VIX
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NKE
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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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