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Is This the ‘Hold Your Nose’ & Buy Moment You’ve Hoped For?

By Friday's close, investors found themselves grappling with the worst week for the stock market in about a year. The S&P 500 fell every day this week paring almost 4% of its gains over a period of only 5 days.

Not only did the

debt drama in DC and the endless financial woes of Europe send investors running for the exits but the latest economic data amplified market jitters.

The latest government data showed the domestic economy stumbled badly in the first half of 2011 and came dangerously close to contracting in the January-March period.

Also, consumer spending, which accounts for about 70 percent of U.S. economic activity, decelerated sharply in the second quarter, advancing at only a 0.1 percent rate -- the weakest since the recession ended two years ago.

The confluence of negative catalysts raised some key questions for investors.

Is the market way ahead of itself?  Or is this a 'hold your nose' and buy opportunity - one that you'll kick yourself for missing?

Instant Insights with the Fast Money traders

Trader Steve Grasso suggests taking a deep breath, putting on those nose plugs and diving in – at least selectively. “I’m a buyer of names that you really want to own on the pullback,” he says.

Grasso’s market ‘tell’ is how the S&P behaves when it hits the 200-day moving average, which is currently around 1284. As you can see from the chart, the market bounced off that level on Friday.

In fact, the trend has been in tact for well over a month. “Since June 16th the market has bounced off the 200-day. “Chart it -  that’s where we’ve been bouncing,” he says.

And he adds, if you go long don’t freak out if the S&P violates the 200-day a little – markets can undershoot and overshoot. However, “If we break through significantly, then start scaling back.”

Trader Patty Edwards is also bullish - relatively. “I’m not overly worried right now,” she says. Edwards suggests putting Starbucks and Nordstrom on the radar. Edwards explains that right now she’s scaled back her portfolio and only has about 35% exposure to stocks because of the debt drama - but “I have a list and when the air clears I’m ready,” she says.