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Halftime Report: Retail - The Next Sector to Pop

Stocks were up on Monday following an announcement from the G-20 that they would continue their stimulus policies, pushing the Dow to its highest intraday levels of the year as the US dollar hit 15 month lows.

Tech stocks were among the best performers after Credit Suisse raised PC forecasts and Motorola creating jobs after the launch of the Droid handset. Financials were also strong in Monday's trading, with traders suggesting that there may be new life in the sector. But with all the buzz around the dollar, traders see life coming back in the retail sector, and it may be primed for the next big pop in the market.

So, what are the smart plays in the market today?

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With the Dow hitting new yearly highs, it must be noted that stocks were at similar levels just a few weeks ago, what can we read into this?

"It's a great comeback story over the last couple weeks," says Joe Terranova, who points out that the markets were able to "survive" the economic reports - ISM, FOMC and unemployment - last week, but now sees the focus of the market on performance into the end of year.

One area leading the markets today is technology, but Palm shares have significantly lagged the sector in intraday trading, down over 2% with 30% of its shares outstanding being sold short. With Radioshack's announcement that they will be carrying the iPhone in their stores, "that's not good for the direct, one-to-one comparison between Palm and Apple," says Jon Najarian, who points out big moves to the upside in both Radioshack and Apple.

But which are the strongest names in the smart phone world? "There are going to be winners and losers," says Zach Karabell, who thinks Palm will be one of the losers. Karabell estimates that space exists for about 6 manufacturers globally, and sees Research in Motion as a mainstay in the industry.

Another notably strong sector can be found in the financials, where some notable names have experienced pullbacks recently, stirring up buyers and pushing prices for the shares higher. Mike Khouw, speaking specifically about Goldman Sachs, points out that although the stock is up 2% intraday, it is still off of its highs. He sees this "best of breed" investment bank as a good buying opportunity right now.



With the G-20 announcing continued plans for stimulus policy without any support for the dollar in the weekend's meeting, the US currency was off during Monday's trading by over 1%.

Joe Terranova sees the movement in the dollar as a "continuation of a downward trend," aided by easy monetary policy in the US and growth at lower-than-necessary levels.

Zach Karabell agrees that the dollar stands to weaken because of the US economic environment, but highlights that valuations in global markets cannot be completely tethered to fluctuations in the currency. He points out that the market is being fuelled, instead, by the profitability of companies.



Gold is also on the mind of the market, hovering over the $1100 mark. Can the precious metal maintain its momentum, and where can your money be best positioned?

Mike Khouw expects gold prices to continue their rise, and also notes that some gold miners are positioned to experience more significant gains with the rise of the commodity. Some of the miners, he points out, had hedging programs in place so it will take some time to predict how significantly they will benefit to the fullest from rising prices, but the general trend in the industry is leverage to the upside.



Consumer names had traders buzzing Monday, with McDonalds announcing a 3.3% rise in same store sales, Abercrombie and Fitch receiving an upgrade from Goldman Sachs. But can you be confident betting on the US consumer?

"I think you'd be foolish to bet against the US consumer," says Jon Najarian, who is long retail names like Radioshack, Abercrombie and Fitch, TJ Maxx among other retail names. He sees the market's next big pop in the retail sector. "I think there's a lot more upside for these stocks," he says.  

"I think people are underestimating the power of the affluent consumer" adds Joe Terranova, "they are the ones that are providing resiliency for retail names."

Zach Karabell backs up Terranova's point, highlighting that the unemployment rate for individuals with a bachelors degree is significantly lower than the general unemployment rate, and "it is not going up."



Jon Najarian: I'm a buyer into the close.

Joe Terranova: Looking for the S&P futures to trade above 1100 in the next few days.

Zach Karabell: I'm a buyer as well, the trajectory of Congress did not change over the weekend.

Mike Khouw: The market is going higher.

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CNBC.com with wires