Halftime: 4 Signals That Will Either Confirm Or Deny Rally

Investors found themselves in a state of limbo Tuesday as they grappled with more weak economic data versus more strong earnings reports.

On the bullish side, DuPont wowed the Street with a quarterly profit that nearly tripled due to strong sales in all of its businesses.

And on the bearish side, weaker than expected consumer confidence renewed jitters that the second half could be problematic.

How can you trust the rally is real? What should you be watching now?

You’ve heard a lot of talk about the 200-day in the S&P which is 1113, but I’m now focused on the 100-day in the S&P which is 1128, reveals Joe Terranova. We haven’t elevated above that level since May 13^th. I’m looking for the market trade above that range to confirm the rally. My bias is that the second half of the year will be favorable for equities.

I'm also watching gold and Treasuries as a market tell, Terranova adds. That's because I believe we need to see money rotate out of safe havens and into equities. As a result I’m watching for gold to break below 1144 and the yield in Treasuries to break above 3.13.

I’m watching 23.38, the 200-day in the Vix , says Jon Najarian. Last time we hit that level we bounced higher but this time we pushed through it. If the Vix doesn’t break back to the upside I'd take it as a signal that we can sustain the rally.

The market has been jubilant but now I’m seeing fatigue, counters Patty Edwards. I don’t like the technicals yet. I'm cautious and staying on the sidelines. However, if we break above the 100-day that Joe talked about - then I’ll feel better.


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POLL OF THE DAY

Considering shares of Boeing are down about 8% over the past 3 months, how should you game this stock ahead of earnings Wednesday?

Find out what fundamentals, technicals and insights from the options world all suggest lie ahead for this stock. Click here to read Fast Money 360: Boeing.

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EURO STALLS NEAR 2-MONTH PEAK

The euro appeared to stall on Tuesday near a two-month peak around 130.

What should you make of it?

I agree that 130 is an important technical level on the euro, says Brian Kelly. If we get above that I think we could see the euro rally further.

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ANALYZE THIS: BP

Shares of BP traded lower on Tuesday after the oil giant reported a record loss and confirmed that Bob Dudley will replace Tony Hayward as chief executive on October 1^st. BP also said it would take a charge as a result of the Gulf of Mexico oil spill amounting to $32.2 billion.

Meanwhile the SEC and the DOJ have launched a probe into market trading connected to the spill.

What should you be watching?

In the next two weeks either the top kill or the bottom kill should end the spill, says Whitney Tilson of T2 Partners. That will be very important from a psychological stand point. Yes the costs of the clean up will be severe but BP will be able to spread them out over time.

Meanwhile the company is reporting spectacular earnings and cash flows. It should easily be able to earn its way out of trouble, Tilson adds.

For me the trade is long Apache as the beneficiary of BP’s asset sale, says Joe Terranova.

Tilson has been bullish BP for quite some time. Click here to read what he told us on June 30th.

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Trader disclosure: On July 27, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kelly owns (BP) puts; Terranova owns (AMZN), (EMC), (CREE), (CRCM), (LRCX), (COP), (AXP), (BMO), (CSX), (PEP), (CVS), (GS), (PCP), (C), (APA), (FCX), (JOYG), (MMM), (MOS), (UAUA), (WYNN), (GOOG), (BBY), (SU), (KOL), (BAX), (JNPR), (GLD)

Brian Kelly
Accounts managed by Kanundrum Capital own (UNG)
Accounts managed by Kanundrum Capital own (BAK)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own (VIV)
Accounts managed by Kanundrum Capital own (XLF)
Accounts managed by Kanundrum Capital own (GME)
Accounts managed by Kanundrum Capital own (OIH)
Accounts managed by Kanundrum Capital owns Euros
Accounts managed by Kanundrum Capital owns Australian Dollars
Accounts managed by Kanundrum Capital own (TBT)
Accounts managed by Kanundrum Capital own (AAPL) calls
Accounts managed by Kanundrum Capital are short (GLD)
Accounts managed by Kanundrum Capital are short the Yen
Accounts managed by Kanundrum Capital are short the US Dollars

For Patty Edwards
Edwards owns (AKAM) for clients
Edwards owns (FCX) for clients
Edwards owns (BA) for clients
Edwards owns (TXN) for clients
Edwards owns (NVDA) for clients
Edwards owns (INTC) for clients
Edwards owns (DELL) for clients
Edwards owns (MSFT) for clients
Edwards owns gold for clients
Edwards owns platinum for clients
Edwards owns silver for clients
Edwards owns the Russell 2000 for clients
Edwards owns the S&P500 for clients

For Joe Terranova
Terranova works for (VRTS)
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners owns more than 1% of (CASS)
Virtus Investment Partners owns more than 1% of (LDR)
Virtus Investment Partners owns more than 1% of (LPHI)
Virtus Investment Partners owns more than 1% of (MGRC)
Virtus Investment Partners owns more than 1% of (XLB)
Virtus Investment Partners owns more than 1% of (XLP)
Virtus Investment Partners owns more than 1% of (XLY)
Virtus Investment Partners owns more than 1% of (XLI)
Virtus Investment Partners owns more than 1% of (XLK)
Virtus Investment Partners owns more than 1% of (XLU)
Virtus Investment Partners owns more than 1% of (SUBK)
Virtus Investment Partners owns more than 1% of (WDFC)
Virtus Investment Partners owns more than 1% of (YDNT)
Virtus Investment Partners owns more than 1% of (DRYS)

For Whitney Tilson
Funds Managed by Tilson own (BP)
Funds Managed by Tilson own (MSFT)


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