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China, The Rally Is In Your Hands?

New results left investors ever more worried that China could take down gains in stocks all around the world.

Ironically, those fears stemmed from China’s white hot economic growth. Gross domestic product expanded 10.7 percent between October and December, with results triggering chatter that China will leapfrog Japan this year to become the world's second-largest economy.

And that led to speculation that Beijing may do more to curb inflation – a lot more.

As you may remember, earlier in the week China ordered banks to curb lending through the end of the month. But economists say it won’t be enough. It’s probably only a matter of time before Beijing tightens monetary policy by raising interest rates.

"Obviously the month-on-month growth momentum is very strong," said Xing Ziqiang, an economist at CICC in Beijing. "So I think the chances for us to see an interest rate rise in the first quarter are increasing."

Whether reduced bank lending -- a rate increase -- or both; China's commitment to aggressively preventing bubbles has tremendous implications for global stocks. Resource names including Freeport McMoRan, Newmont Mining and Dow Chemical are among the many names in the materials sector that sold-off on the news.

What must you know before you make your next trade?

The FXI is down 14% since hitting highs last November, explains Tim Seymour. But that’s a wounded chart, I wouldn’t go near it right now, says Tim Seymour. But I do think China as an economy is in fine shape. I don’t see any credit problems on a corporate or consumer level.

I’m watching $75.48 in Freeport, says Guy Adami. I think it’s okay to dip a toe with a tight stop. However below that level all bets are off.


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Trader disclosure: On January 21st, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman Owns (AAPL); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (TGT); Pete Najarian Owns (BBT) Calls; Pete Najarian Owns (BP), Is Short (BP) Call; Pete Najarian Owns (GS) Call Spread; Pete Najarian Owns (INTC) Calls; Pete Najarian Owns (MS), Is Short (MS) Calls; Pete Najarian Owns (MRVL); Pete Najarian Owns (PFE); Pete Najarian Owns (XLF) Calls; Pete Najarian Owns (CLF) Call Spread; Pete Najarian Owns (TCK), Is Short (TCK) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU)’ Seymour Owns (FXI), (AAPL), (BAC), (GOOG), (INTC), (POT)

For Tim Seymour:
Seygem Asset Management Is Short (PBR)
Seygem Asset Management Is Short (FCX)

For Jon Najarian:
Jon Najarian Owns (GOOG) Put Spread
Jon Najarian Owns (POT) Call Spread
Jon Najarian Owns (GOOG)

For Brad Hintz:
Hintz Owns Morgan Stanley And Discover
Hintz Owns (CME)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investmet Discretion Own More Than 1% Of (GS), (MS)
(GS), (MS) Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking-Securities Related Services)
An Affiliate Of Bernstein Received Non-Investment Banking Compensation From (GS), (MS) (Securities Related Services)

For Richard Kugele:
Needham & Company Is A Market Maker In (STX)


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