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Market Stability Might Be Deceiving

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Stocks traded modestly higher on growing optimism about a rate cut at the Federal Reserve's December meeting. Sounds like the market is stabilizing, finally. But maybe it’s not….

How do you interpret the rally?

A market deteriorates under the cover of strength in blue chips, says Oppenheimer Chief Market Technician Carter Worth on CNBC’s “Closing Bell.”

It’s not strong stocks that are leading this rally, but hopeless little bounces in otherwise very beaten down names. For example, Countrywide (CFC) is make news Friday because it’s up about 15% to $10. However it dropped from $45 this summer.

What about the stability in the dollar?

Downtrends usually have a counter-trend rally, Worth adds. So you’re seeing a counter-trend rally in the dollar, as well as the homebuilders and Citibank. But that doesn’t change the primary presumption that it’s a downturn and bearish.

How would you trade it?

I would short the financials and short technology, he says. Can you solve the sins of excess liquidity with more liquidity? I think not.

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Trader disclosure: On Nov. 30, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (ETFC), (COP), (NAT); Najarian Owns (BIDU) Options, (CFC) Options, (GOOG) Options, (XMSR) Options, (YHOO) Options; Seymour Owns (ETFC), (INTC), (MSFT), (TWX), (AAPL),(DELL); Seygem Asset Management Owns (CFC), (EEM), (X), (YHOO), (ITU); Finerman's Firm And Finerman Own (GS), (HD); Finerman's Firm Owns (TSO), (WMT), (YHOO), (PLCE), (LTD); Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns Fortis; Finerman's Firm Is Short (SPY), (IWM), (IYR), (IJR), (BIG), (HOV), (LEN); Finerman's Firm Is Short (MDY) And Owns (MDY) Puts; Finerman's Firm Is Short (LEH) And Owns (LEH) Puts