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Two Catalysts Likely To Determine Market Direction

According to Joe Terranova, two catalysts are likely to determine to the market direction, perhaps through the end of October!

I think we’re at an inflection point in the market, says the Fast Money trader. We have ISM and employment numbers coming this week and that will be a “tell.” If we get good numbers and the market does not rally, that will say to me we’re looking at a correction.

So what should you be watching for?

ISM

Last month ISM, a key measure of manufacturing, surprised on the upside with a strong reading of 48.9 up from June’s reading of 44.8. According to the website FXStreet, “we expect to see ISM break the important 50 level with a reading of 51, which is slightly above the consensus expectation.”

I’m also looking for a number north of 50, adds Terranova. But if we don’t get it or if the market is soft on the news, trade carefully. It could be a sign that market wants to sell-off.

Employment

Economists polled by Reuters forecast job losses of 225,000 for August, which would be a slight improvement from 247,000 lost in July. But they expect the unemployment rate to rise to 9.5 percent in August from last month's 9.4 percent.

You can count on Fast Money for a wide range of proprietary trades on employment data -- that's coming later in in the week.

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Trader disclosure: On Aug 31st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Owns (AMZN), (FCX), (JPM), (SU), (WFT); Terranova Is Short (SHLD); Terranova Is Short (ESS); Terranova Owns (CCL) Puts; Terranova Works For (VRTS); Finerman Owns (PDE); Finerman Owns (RIG); Finerman's Firm Owns (BAC) Preferred Shares, Finerman Owns (BAC) Preferred Shares And Owns (BAC); Finerman's Firm Owns (WFC) Preferred Shares And Is Short (WFC), Finerman Owns (WFC) Preferred Shares ; Finerman's Firm Owns (MSFT), (NOK), (WMT), (PBR), (PDE), (RIG), (TBT); Finerman's Firm Is Short (USO), (IYR), (IJR), (MDY), (IWM); Najarian Owns (BAC) & Short (BAC) Calls ; Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian Owns (HGSI) Call Spread; Najarian Owns (FCX), Owns (FCX) Put, Is Short (FCX) Calls; Najarian Owns (JPM) & Is Short (JPM) Calls ; Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (PALM) Calls; Najarian Owns (TXT) Call Spread; Najarian Owns (TEVA) Calls; Najarian Owns (C) & Short (V) Calls; Najarian Owns (WFT) Call Spread; Najarian Owns (YHOO) Call Spread; Najarian Owns (ETFC) Calls