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Stocks Stuck In Neutral, Or On Brink Of Wild Ride?

If the past week is any indication you’d better buckle your seatbelt.

The Dow whipsawed in a 300-point range, declining on Europe’s woes, climbing on optimism from the GM IPO, then reversing course because of China tightening.

And to make next week all the more perilous, we're likely entering a period of low volume and high volatility due to the Thanksgiving holiday.

Many investors are closely watching the action in the S&P 500 which closed just below 1,200, an important psychological level. Some believe if stocks fails to break above that level convincingly, it’s a signal that stocks will trade in a tight range for the rest of the year.

What should you be watching? How should you position now?

Instant Insights with the Fast Money traders

Trading sideways into the end of the year would surprise me, says Guy Adami. I think the technicals set up to push us one way or another. My bias is to the downside.

The next key levels for me are 30 points in either direction on the S&P, says Steve Grasso. In other words 1230 on the upside and 1170 on the downside. There's a lot of air in the charts and if we break one way or another, either bulls or bears may be off to the races.

(It's worth noting other technical investors are concerned that the S&P is stuck near its 20-day moving average, which is around 1,198. In a Reuters report, Frank Cappelleri, technical market analyst and trader in New York, says the last time the S&P fell below the average after a prolonged positive trend was in April, which marked a market top at the time.)

I think the reversal over the last two days provides an opportunity for investors to get into the market, counters Brian Kelly. I’m bullish on the fundamentals. QE2 is still out there and we’ve had some pretty decent economic news.

The week after Thanksgiving we’ve got ISM, China PMI and jobs coming, adds Joe Terranova. I suspect the short Thanksgiving week will be spent squaring up positions and getting ready for a final push.


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TRADING THE GLOBE: CHINA

As we mentioned above the volatility in the market was first triggered by events abroad.

Overnight, The People's Bank of China raised bank reserve requirements for the second time in two weeks and the fifth time this year, stepping up its fight to rein in prices, a move that could temper growth.

"Commodities are seeing some increased pressure on China's news because any attempt to tighten their policy is going to dampen their ability to grow," explains Michael McGervey, president of McGervey Wealth Management in a Reuters interview

In China, the Shanghai Index fell 10% before bouncing back.

What’s the trade?

I think it’s a positive sign for China’s market, says Brian Kelly. The market behaved in a fairly positive way on very negative news.

It’s also important to note that with China – the slowdown is a slowdown to 8% growth. That’s a far cry from recession, says Joe Terranova.

My fear is that we’re so reliant on China to grow at an extraordinary rate that any slowdown – even to 8% - will hit stocks.

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TAKE YOUR POSITION: HPQ EARNINGS

The traders suggest keeping a close eye on Hewlett Packard which reports after the close Monday. The stock is down almost 20% this year in the wake of Mark Hurd's departure and its bidding way for 3PAR.

What’s the trade?

I’m a buyer of HP on fundamentals, says Steve Grasso.

I’m watching the action in IBM as my tell, says Joe Terranova. When Mark Hurd resigned money rotated out of HP and into IBM. Now I want to see if the trend reverses.


If the stock pops on earnings, I’d sell the pop, counsels Steven Weiss, author of The Billion Dollar Mistake. We don’t know enough about the new CEO, Leo Apotheker.

The new CEO has only been on the job about three weeks, but I’m confident in the management bench, says Bill Fearnley Jr of Janney Capital Markets. They should be a great resource for the new CEO as he gets his arms around the company.

*Hear more from Fearnley; watch the video above!

What do you think? We want to know!

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Trader disclosure: On November 19, 2010, the day this video was recorded, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns (UPL), (C), (CRM), (PEP), (VRTS), (OXY), (GS), (POT), (AAPL), (ORCL), (MCD), (NKE), (IBM); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (X); Weiss owns (JWN), (MEE), (UA), (UUP)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (IEF)
Accounts Managed By Kanundrum Capital Own (TIP)
Accounts Managed By Kanundrum Capital Own (REE)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (HD)
Accounts Managed By Kanundrum Capital Own (XLK)
Accounts Managed By Kanundrum Capital Own (SMH)
Accounts Managed By Kanundrum Capital Own (SLX)
Accounts Managed By Kanundrum Capital Are Long Euro
Accounts Managed By Kanundrum Capital Are Short (YEN)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co And Its Partners Own (UNM)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (MCD)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CMS)
Virtus Investment Partners own more than 1% of (CSC)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (FCFS)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SOA)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (WMB)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Bill Fearnley Jr.
Janney makes a market in (DELL)

For Mark Schoenebaum
***No Disclosure***



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