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Stocks Shake Off Unemployment

Both the Dow and S&P 500 closed higher on Friday as investors focused on the bright side of a mixed payrolls report that showed smaller-than-expected job cuts in August but also an unemployment rate that hit a 26-year high.

A reluctance among investors to hold short positions going into the three-day Labor Day weekend also helped drive gains.

Although the Friday’s market action was largely positive, results for the week were far more bearish. The Dow was down 1.1 percent, the S&P 500 was off 1.2 percent and the Nasdaq lost 0.5 percent for the week.

What’s in store when you get back to trading on Tuesday?

Strategy Session with the Fast Money traders

I thought the non-farm payroll numbers were good, muses Tim Seymour. It’s what investors needed to see. The employment situation is getting ‘less bad.’

I didn’t think the jobs numbers were good at all, counters Guy Adami. There have been so many layoffs that companies probably don’t have many people left to fire. And don’t forget people fall off the unemployment rolls even when they still don’t have jobs.

Looking ahead to next week, I think the technicals on the S&P are the thing to watch. If the S&P closes below 991 there could be selling pressure. And on the upside I’m watching 1027.

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TOPPING THE TAPE: STICK WITH TECH

Semiconductor stocks rose after Intel's chief executive said in an interview with the Financial Times that aging PC's and Microsoft's launch of Windows 7 will prompt companies to start spending on computers next year.

Also handheld devices continue to be a winning trade with RIM and Nokia charging higher. Earlier in the week analysts at Credit Suisse said "We believe smart phones represent one of the most attractive secular trends in technology."

What’s the tech trade?

I’m longQualcomm , reveals Joe Terranova, but it’s for a trade. However, I like tech overall for the long-term -- I think the fundamental story behind tech is solid.

If you're looking for a trade, keep an eye on Cree, adds Guy Adami. The valuations are nuts but something is going on there.

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TOPPING THE TAPE: COMMODITY STOCKS

Commodities appeared to be picking up some steam with nat gas jumping on Friday. Also copper recorded gains for the second day in a row.

Oil, however, was the odd-man out; it was unable to make any meaningful gains. U.S. crude prices have been trading in a range between $65 to $75 a barrel since the start of August

What’s the trade?

My favorite name in the space is miner Freeport McMoRan but I think it’s stuck at $66, says Tim Seymour.

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GOLD TO BREAK THROUGH $1,000 NEXT WEEK?

Gold continued to flirt with the psychologically important $1,000 an ounce level on Friday, after a mix of inflation anxiety combined with a technical break renewed investor interest.

What’s the trade?

Gold has a functional use, reminds Tim Seymour. Don’t forget we’re heading in a season when demand picks up from jewelers. And the move higher could be a bet that inflation is coming.

Technically the important level to me is $1005, adds Joe Terranova. I’ll be watching to see how it performs at that level.

I expect gold to hit the $1000 level and then blast through it, muses Jim Iurio. I don’t think gold is just a trade, it’s an investment.

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FINANCIAL RALLY RUNNING OUT OF STEAM?

Among financial stocks, shares of mortgage fund providers Fannie Mae and Freddie Mac rose on news that they had regained compliance with New York Stock Exchange share listing rules, reviving their respectability among investors.

What’s the bank trade?

I’m concerned about the financials, says Guy Adami. I think they’ve had their run. And I’d keep an eye on Wells Fargo. They said they were going to repay the TARP without a secondary.

There’s been a lot of money flowing into the ‘junk” financials, explains Steve Grasso. I don’t think investors will hold onto that junk indefinitely but I do expect them to hold for another month or so.

I’m watching Goldman , reveals Joe Terranova. It hasn’t traded below $157 in weeks or settled above $165. If we get a break below $157 that says the broad market probably isn’t too good. And if it closes above $165 it suggests the bulls are off and running again.

In the financials I like Lloyds Bank, adds Tim Seymour.

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RETAIL HOLDRS ETF (RTH) AT 11-MONTH HIGHS

This week same-store sales data showed that although shoppers were not spending freely, the holiday season could be less dismal than feared.

On average, same-store sales fell 2.9 percent at the 30 retailers tracked by Thomson Reuters, better than the 3.8 percent decline analysts had forecast.

Those results helped push the RTH to 11-month highs on Friday with low priced stores such as Target and TJMaxx closing higher as cash strapped consumers continue to hunt for bargains.

"It does seem like the consumer is willing to spend if given a great deal," says Carl Steidtmann, an economist at Deloitte Research. "That reflects a consumer that is slowly coming out of their bunker."

What’s the trade?

J. Crew is up 250% since March, says Guy Adami. You have to ask yourself how long something like that can sustain itself. It assumes things that I don’t think are going to happen.

If you think swine flu is a problem, I’d short the retail space, counsels Joe Terranova.

I’m watching VIP and MICC as a non-obvious retail play on emerging markets, says Tim Seymour.





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Trader disclosure: On Sept. 4, 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), (INTC), (MSFT), (BTU), (NUE), (GS); Grasso Owns (AAPL), (ABK), (ASTM), (BA), (BAC), (C), (COST), (CSCO), (PRST), (V), (WMT), (FAZ); Terranova Owns (AAPL), (QCOM), (EOG); Terranova Owns Gold Dec. Futures; Seymour Owns (AAPL), (BAC), (ETFC), (CHL), (VIP); Seygem Asset Management Is Short (FXI)

GE Is The Parent Company Of CNBC

For Steve Grasso
Stuart Frankel & Grasso's Partners Own (CUBA)
Stuart Frankel & Grasso's Partners Own (DVN)
Stuart Frankel & Grasso's Partners Own (EOG)
Stuart Frankel & Grasso's Partners Own (GRN)
Stuart Frankel & Grasso's Partners Own (HSPO)
Stuart Frankel & Grasso's Partners Own (MSFT)
Stuart Frankel & Grasso's Partners Own (NWS.A)
Stuart Frankel & Grasso's Partners Own (NXST)
Stuart Frankel & Grasso's Partners Own (NYX)
Stuart Frankel & Grasso's Partners Own (PDE)
Stuart Frankel & Grasso's Partners Own (PRST)
Stuart Frankel & Grasso's Partners Own (RDC)
Stuart Frankel & Grasso's Partners Own (ROK)
Stuart Frankel & Grasso's Partners Own (TBT)
Stuart Frankel & Grasso's Partners Own (TLM)
Stuart Frankel & Grasso's Partners Own (XOM)
Stuart Frankel & Grasso's Partners Own (XRX)
Stuart Frankel & Grasso's Partners Own (SDS)
Stuart Frankel & Grasso's Partners Own (STWD)
Stuart Frankel & Grasso's Partners Are Short (QQQQ)
Stuart Frankel & Grasso's Partners Are Short (CL)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO
Virtus Diversifier PHOLIO Owns (IGE)
Virtus Diversifier PHOLIO Owns (DBC)|
Virtus Diversifier PHOLIO Owns (DBV)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (SKT)
Virtus Investment Partners Owns More Than 1% Of (TNB)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (CLB)

For Charles Boorady
Citigroup Global Markets Or Affiliates Has Managed Or Co-Managed An Offering Of Securities Of (AET), (CI) In Past 12 Months
Citigroup Global Markets Or Affiliates Has Received Investment Banking Compensation In Past 12 Months From (AET), (CI), (UNH), (MHS), (CAH), (ABC)
Citigroup Global Markets Or Affiliate Received Non-Investment Banking Compensation In Past 12 Months From (AET), (GTS), (CI), (CVH), (HNT), (HS), (HUM), (UNH), (MHS), (CAH), (ABC), (MCK)
(GTS), (HS), (AET), (CI), (UNH), (MHS), (CAH), (ABC) Are Or In Past 12 Months Were Investment Banking Clients Of Citigroup Global Markets
(AET), (CI), (CVH), (HNT), (HUM), (UNH), (CAH), (GTS) Are or In Past 12 Months Were Clients Of Citigroup Global Markets (Non-Investment Banking, Securities Related Services)
(AET), (CI), (CVH), (HNT), (HS), (HUM), (UNH), (MHS), (CAH), (ABC), (MCK), (GTS) Are or In Past 12 Months Were Clients Of Citigroup Global Markets (Non-Investment Banking, Non-Securities Related Services)

Citigroup Global Markets Or Affiliate Received Compensation In Past 12 Months From (AET), (GTS)
Citigroup Global Markets Is A Market Maker In (CAH), (PFWD)

For Mike Khouw:
Cantor Fitzgerald Is A Market Maker In (AAPL)

For Jim Iuorio:
Iuorio Owns (GLD), (SLV)



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