Just how much momentum is left in the market? That’s the question on everyone’s mind, these days with a slew of both negative and positive catalysts on the horizon.
On the downside, Europe’s financial woes continue to linger and risingoil threatens to generate a drag on the economy, by triggering a spike in prices at the pump.
But on the upside,U.S. manufacturing output rose solidly in January and a gauge of factory activity in New York state hit a 1-1/2-year high in February.
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Is the S&P more likely to grind higher or tumble lower? In an environment such as this, the Fast Money pros suggest watching how the market behaves in and around a few key technical levels.
In order to feel bullish, “we have to close above 1356,” says pro trader Steve Grasso. "And that needs to hold."
1356 has been a level of resistance and if bulls can keep the S&P above that level for a few days, it would suggest the momentum in the market remains to the upside.
“But, then we need to hold and close above 1370,” Grasso adds. (That’s the May 2011 high.) If that were to happen Grasso says, then you’ll be looking at a break out. Should that happen, position for the market to move sharply higher.
However, Grasso’s bias however is lower. “Right now, I’d rather be a seller of the market.” He thinks the headwinds are just too fierce and considering the run already, Grasso believes that path of least resistance is lower.
Technical analyst Katie Stockton of MKM confirms that these levels are absolutely key for the market.
However, her analysis is more bullish. She says, “we saw similar chart patterns in 2010 and that preceded a break out to new highs. I’d remain bullish throughout a consolidation phase and expect the S&P to exceed 1370 – with next resistance around 1440.”
What do you think? We want to know!
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Trader disclosure: On Feb 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss is long RIMM; Weiss is long HPQ; Weiss is long QCOM; Weiss is long CHRS; Weiss is long VZ; Weiss is long BRCM; Weiss is long SNDK; Weiss is long MDRX; Weiss is short AAPL puts; Weiss is long AMZN puts; Weiss is short MT; Najarian is long AAPL call spreads; Najarian is long GS call spreads; Najarian is long RVBD call spreads; Najarian is long JNPR call spreads; Najarian is long FIO call spreads; Najarian is long NBR call spreads; Najarian is long LTD call spreads; Najarian is long M call spreads; Najarian is long TJX call spreads; Najarian is long HPQ call spreads; Najarian is long RIG call spreads; Grasso is long ASTM; Grasso is long S; Grasso is long XLU; Grasso is long AVAV; Grasso is long BA; Grasso is long D; Grasso is long DIO; Grasso is long LIT; Grasso is long MHY; Grasso is long NUAN; Grasso is long MO; Grasso is long PFE; Grasso is long PRST
For Steve Grasso
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own HPQ
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Stuart Frankel & Co and it’s partners own ZNGA
For Camilla Sutton
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Kilburg is long TLT
Kilburg is long SPXU
For Katie Stockton
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For Aaron Chew
(FSLR) I, Aaron Chew, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.
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