On Friday investors were again attempting to game the Dow and S&P after positive developments in Europe gave bulls every reason to run.
AgainItaly landed in the spotlight after that nation’s top lawmakers approved economic reforms, easing investor concerns about the euro zone's debt crisis. Although the package of austerity measures demanded by the European Union must still go up for another vote, it's widely expected to receive approval.
”If we are near the end of Europe sending the market into a tailspin everyday, if that clears –there could be a significant S&P rally ahead, 10% or more by the end of the year,” trader Zach Karabell says.
The catalyst, he says, involves Europe and whether the worst headlines are now over. If that's the case Karabell thinks the market will quickly focus on a string of catalysts that are very bullish. “The latest earnings really justify a rally,” Karabell says. “And the chase for performance among under-invested money managers will be on!"
Trader Josh Brown agrees. He says there's a lesson to be learned from the sell-off earlier in the week. "Negative headlines out of Euorpe have now shifted from risk-off, to buying opportunities. When you see a day like last Wednesday, add to positions. You're buying US stocks at 12 or 13 times earnings. You're not going that far out on a limb."
Trader Steve Grasso thinks technical action tells the same story.
When the S&P sold off “the market held around the 100-day. That was support. The market did not make a new lower low. As a result I’m positive on the market,” Grasso says.
Trader Brian Kelly just doesn’t buy it.
“The only thing that has changed in the last 48 hours is that political volatility in Italy has gone down. But in Europe we’re still looking at a recession. And I think eventually the euro-zone breaks apart.”
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CNBC.com with wires.