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Baffled by Conflicting Signals in Market? Not the Fast Pros

On Thursday investors were again scratching their heads, after new data gave very conflicting signals about the economy and by proxy the market.

On the downside, Supervalu joined the growing list of companies that reported absolutely dismal earnings.

To make matters that much worse Supervalu, the parent company behind Acme, Albertsons, Shaw’s and other grocery store chains, also suspended its dividend payments and, according to reports, said it may consider putting itself up for sale.

Earlier in the week, AMD slashed its outlook due to slower demand and Applied Materials said it would miss full year targets.

All told, stocks should sell-off right? Not so fast. There’s some relatively good news too.


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The latest Labor Department data showed initial claims for state unemployment benefits dropped 26,000 to a seasonally adjusted 350,000, the lowest level in four years.

AlsoMarriott beat the Street and raised profit expectations and Chevron said optimistic things about its second quarter profit.

It’s entirely possible that investors will have to reconcile conflicting signals like these across all of earnings season. That means on any given day the stock market could stage a sharp rally just as easily as it could sell off.

How should you position?

Instant insights with the Fast Money traders

In this kind of environment, trader Guy Adami says technical are not to be ignored. In the near term, he thinks it’s a bullish sign that the S&P traded down to 1325 and then bounced. (1325 is a key technical level – a point of past support and before that resistance.) “If we close in positive territory it would auger well for the rest of the week.”

Trader Murphy says much the same. “The ranges are very important right now. The market is trading very technically. “I’m a buyer on down days and seller on up days.”

If you’re looking for single stock ideas, Adami says stick with what’s working. “Look at Pfizer – on a lousy tape the stock traded higher,” he says. “Also check out Church & Dwight . In this tape, it’s traded to an all time high.”

Trader Brian Kelly sees the market a little differently. With the overseas financial crisis, fiscal cliff and other negative catalysts looming over the market he says, “I’m a buyer of Treasurys and I would play it long the TLT – I think that’s the single best trade out there – I’m holding for the next 6 months.”

Posted by CNBC's Lee Brodie

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Trader disclosure: On July 12, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Mike Murphy is long SBUX; Mike Murphy is long FB; Mike Murphy is long NAV CALLS; Mike Murphy is long CMI; Mike Murphy is long CHK; Mike Murphy is long CSX; Mike Murphy is long FDX; Brian Kelly is long TLY; Brian Kelly is long SPY PUTS; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long NUE; Guy Adami is long AGU; Guy Adami is long BTU; Guy Adami is long MSFT; Guy’s Wife works at Merck; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MRK; Pete Najarian is long NSC

For Boris Schlossberg
Nothing to disclose

For Eric Jackson
Eric Jacson is long YHOO

For Rick Snyder
Nothing to disclose

For Marci Ryvicker
Wells Fargo Securities, LLC  maintains a market in the common stock of DIS
Wells Fargo Securities, LLC  maintains a market in the common stock of CMST
Wells Fargo Securities, LLC  maintains a market in the common stock of TWC

CNBC.com with wires.