On Wednesday investors were wondering if they should place more bullish bets on economic strength after a new report showed manufacturing in the Midwest expanded more than expected in December.
Should you place new bullish bets, now?
Instant Insights with the Fast Money traders
It seems to me that 1119 which was resistance in the S&P has now become support, says Scott Redler of T3 Capital. It’s bullish to see that kind of action. I expect the market to push higher.
I’m also bullish, says Steve Grasso. I think the S&P is going much higher. We could be in a vacuum right up to 1200.
I’m watching the SPX , adds Jared Levy of Peak6. Volatility has really contracted which means options investors aren’t expecting big moves in the S&P in either direction.
Going into next year I expect it to continue that way, Levy adds. But if the S&P breaks below 1093, then I’d turn bearish.
DOLLAR RALLY HAS LEGS?
A belief that the recovery is stronger in the US than it is abroad has lately generated a lot of interest in the greenback with the dollar trading higher against of basket of currencies mid-day.
Does the dollar rally have legs?
Some investors say the move higher in the dollar is an oversold bounce, but it looks likes its more than that to me, counsels Scott Redler of T3 Capital. Patterns suggest that the Dollar Index is starting to trend higher. If the dollar pushes above 80 I think it gains strength into next year. But, with that said, I would not be a buyer of dollars at these levels.
On Tuesday’s 5p show, signs of economic stability led Fast Money trader Steve Cortes of Veracruz to suggest establishing a long position in the US dollar and shorting the Aussie dollar or Mexico's peso against it. I think the US is outperforming. I believe the US economy will do better than most other economies on a relative basis, Cortes says.
TOPPING THE TAPE: TECH NAMES
In tech, the Fast Money traders are closely watching the action in Apple which traded above $211 mid-day.
Earlier Wednesday, Kaufman analyst' Shaw Wu raisied his Apple price target to $253 from $235 on strength in all three of Apple's major product lines.
What’s the Apple trade?
As far as I’m concerned Apple is more than a computer maker -- it’s a culture, says Steve Grasso. They’ve cornered the market on being cool. As a result, I think Apple continues to climb.
And technically Apple looks great, adds Scott Redler. As long as it holds $208 I would not be short.
With the stock above $210 I think investors will have a chance to buy lower, counters Jared Levy. I’d sell the front month $200 puts.
OPTIONS ACTION: CEPHALON
Jared Levy has spotted unusual options activity in Cephalon.
The volume of May 75 calls trading on Wednesday suggests to me that big investors may be betting on significant upside in this stock, Levy explains.
WAITING ON 7-YEAR AUCTION
U.S. Treasury debt prices were little changed on Wednesday as investors mulled whether an auction of seven-year notes in the afternoon would be met with much demand.
Treasuries also may be finding some footing on the technical front after a four-week run-up in yields that has been driven, at least in part, by some optimism that an economic recovery is taking hold, analysts said.
Demand at auctions of two-year and five-year notes this week have not been bad, given the thin holiday-week staffing levels and expectations of a huge amount of U.S. government debt issuance in the coming year.
"Treasuries have continued to take direction from the relative success of this week's two-year and five-year auctions," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
What’s the trade?
I think rates could go a little higher, speculates Scott Redler, but nothing crazy.
If you’re a retail investors I don’t think Treasurys is the place to be, counsels Jared Levy. It’s just a very muddy area and there are better places to put your money.
CALL THE CLOSE
Steve Grasso: As long as we hold 1120 in the S&P’s I’m a buyer.
Jared Levy : I’m neutral.
Scott Redler: I’m a buyer as long as 1120 holds.
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Trader disclosure: On Dec. 30th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:
Redler Owns Gold
Redler Owns (AAPL)
Kelly Owns (TBT)
Kelly Owns (DXY)
Grasso Owns (APPL)
Levy Is Short (AAPL) Puts
CNBC.com with wires