Is the Next Leg of the Bull About To Begin?

By the end of the Friday’s session bulls were on the brink of pushing stocks into the green for the year and appeared to be picking up momentum.

Looking at the fundamentals, General Electric raised its dividend delivering a shot of confidence to the market.

"GE is a company whose tentacles extend throughout large parts of the economy, and (the hike) clearly shows they're (having) a bit more visibility on their future cash flows," explains Adrian Cronje of wealth management firm Balentine.

Also industrial giants Honeywell and Ingersoll-Rand generated tailwinds after they both posted better-than-expected results and raised full-year earnings views.

The one-two-three punch bolstered investor confidence.

And from a technical perspective, the S&P 500 rose above 1,100 for the first time in a month. The gain -- along with other chart moves – sends a bullish signal to investors who watch patterns closely.

How should you be positioned now?

Instant Insights with the Fast Money traders

We saw an important reversal this week, says Tim Seymour. I think we have momentum for the market to climb to 1140.

I’ve been very bearish but looking at the earnings outlooks from Caterpillar, Ford and other big companies I’ve come to think the economy is not as weak as I thought, says Brian Kelly.

Earnings were phenomenal this week, says Joe Terranova. The numbers show the headwinds facing this market are starting to dissipate. I think money mangers will be looking to deploy capital; they'll be afraid to miss the next leg higher.

I’m not so sure, says Steve Grasso. I don't like that we're making this move on light volume. On June 21^st the market touched 1128 and then we backtracked down to 1010. That has me cautious. Remember it’s not the things we know that take the market down, it’s the things we don’t know.

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EUROPE’S STRESS TESTS

The results of Europe's much anticipated stress tests finally hit the Street on Friday and their results caught investors a little off guard. They showed only 7 out of 91 banks failed the tests - a surprisingly low number.

If the numbers are accurate “we either made a mountain out of a mole hill,” says CNBC’s Steve Liesman. “Or those results tell us that this test is deeply flawed.

Although European markets were closed at the time the results came out, US markets were clearly open and there were some clear winners and losers notably Santander and Banco Bilbao Vizcaya Argentaria .

What’s the trade?

If you’re trading the European banks I think we’re looking at a classic situation of buy the rumor sell the news, says Joe Terranova.

Credit Suisse upgraded their outlook on the euro to 130 from 118, adds Tim Seymour. That suggests the risk trade is back on.

However I have to concede that it seems suspicious that Europe’s banks only need to raise about $3 billion total when Goldman expected Deutsche alone needed $14 billion.

If you’re looking for a trade, I think the two banks mentioned above may pull back, adds Seymour. Or if you'd rather play the international consumer I still think Telefonica is a solid play. I also like Telenor and Teliasonera .

The stress tests mandate that banks hold onto capital, reminds Patty Edwards. That’s effectively tightening. I would not play the European consumer in the wake of these results.

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COPPER - HIGHEST SINCE MAY 13

Commodities traded to the upside this week with copper the biggest winner, posting its highest settle since May 13.

What’s the trade?

I’m watching Freeport , says Joe Terranova. I think it goes above $75.

Looking at another commodity, gold traded lower, adds Brian Kelly. That’s worth watching.

I’m seeing investors sell their stakes in gold miners and putting money to work into resource names such as Cliffs, adds Steve Grasso.


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MARKET BUZZKILL: AMAZON

Amazon was a loser in Friday’s session although the stock made a notable turn mid-day after trading down as much as 9%.

What’s the trade?

Around $105 I’m a buyer, says Joe Terranova.

There’s tremendous e-commerce demand in China and Europe, he says. It's true capital spending was a drag on the earnings but it’s because Amazon is building fulfillment centers to meet the growing demand.

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GET READY FOR RETURN TO MARCH ‘09 LOWS?

We’re close to being positive for the year, but TrimTabs CEO Charles Biderman says it could all melt away in a day and we could go right back to the March 2009 lows.

What makes market so hollow?

According to Biderman the trouble is that investors aren’t putting new money to work.

”Investors have been taking money out of the market – out of mutual funds and ETFs – yet the market cap is up without any new money,” he explains.

What else does he have to say? Watch the video now and find out!

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Trader disclosure: On July 23, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (BAC), (F), (FCX), (GE); Kelly owns (BP) puts; Kelly is short (GS),; Grasso Owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST); Terranova owns (AMZN), (EMC), (CREE), (CRCM), (LRCX), (COP), (AXP), (BMO), (CSX), (PEP), (CVS), (GS), (PCP), (C), (GLD), (APA), (FCX), (JOYG), (MMM), (MOS), (GLD), (UAUA), (WYNN), (GOOG), (BBY), (SU), (KOL)

For Steve Grasso
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Stuart Frankel & Co and it’s partners are short (QQQQ)

For Joe Terranova
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Terranova is chief market strategist of Virtus Investment Partners, LTD.
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Virtus Investment Partners owns more than 1% of (WDFC)
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For Patty Edwards
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