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Market Pros: Investors Facing An Icy December?

Look out the window and you’re bound to spy investors grabbing their scarves and mittens – there's growing concern that Wall Street may be facing an icy December.

We’re talking about the financial crisis gripping Europe and the chatter suggesting overseas ills could make the American markets sick in the weeks ahead.

"The idea of a contagion is being taken more seriously both in the European Union and how it might affect (U.S.) markets," explains David Katz, principal & senior portfolio strategist at Weiser Capital Management in a Reuters interview.

To make matters all the more bearish, on Tuesday the euro sank to a 10-week low against the U.S. dollar and the S&P ended the month little changed due profit taking. It's the S&P's worst monthly performance since August.

Is a big chill about to settle over the market?

Instant Insights with the Fast Money traders

1173 is a key level on the S&P, says Steve Grasso, the bounce back from the flash crash. That’s the level to watch. My expectations is that we break below 1173 and then trade down to 1150.

I don’t like the way the market is trading right now either, adds Guy Adami. If the market breaches 1170 I think there could be a lot of downside with 1150 being only the first stop on a bigger move down.

I agree that technically the market wants to go lower, adds Tim Seymour. I'd also keep an eye on the dollar index , he says. 81.77 is the key level here.

I'm not entirely bearish, adds Grasso. After the market trades down to 1150 I think it could bounce toward 1200 into year’s end but I don't expect we make new highs.

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IS TECH TELLING YOU SOMETHING?

You could almost see investors scratching their heads Tuesday as they tried to make sense of the weakness in tech.

What must you know? How should you position now?

Nasdaq-vs-US-Dollar-Index.jpg
CNBC

Instant Insights with the Fast Money traders

Technology led the market higher due to the weaker dollar, explains Joe Terranova. If you look at the relationship between the dollar and the Nasdaq you can see that high point in the Nasdaq is directly related to the low point in the US dollar. But dollar weakness is probably over in the short-term.

As a result, if you were overweight tech from September to November, I’d scale down to market-weight or underweight, Terranova counsels, but I would not go short.

I would say the trade is longdollar, adds Steve Cortes.

But in addition to moves in the greenback, I think the sell-off in tech has everything to do with de-risking, he says. Money managers are taking profits in their trades that have done well. They’re not going to risk losses with the year ending in 5 weeks.

In tech, I’m one of those money mangers taking money off the table, reveals Patty Edwards. I’ve trimmed positions in Akamai and F5 – because these stocks have had significant runs and it’s sound discipline to take profits.

I don’t think we’re seeing a fundamental change in the tech story – rather tactical trades into year’s end. If you have a long-term time horizon, I think the sell-off is an opportunity. I’m a buyer of Qualcomm.

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THE LOVE TRADES

The traders suggest keep a close on the love trades such as Apple and Google - trades that investors have been in love with -- because many are dollar oriented trades.

What's the take away?

I'm not sure I'd go short, says Tim Seymour, because I expect investors will be reluctant to short the US market when fundamentals look pretty good.

FedEx hasn't been a love trade but it might become one, says Guy Adami. I wouldn't be surpised if they comne out and raised guidance for the quarter.

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SILVER & GOLD

The traders are also closely watching the action in silver and gold – as well as copper – all traded higher despite a stronger dollar.

What’s the trade?

My clients are still buying these names, says Steve Grasso, because they believe the names can still run while the market is all over the map.

It wouldn’t surprise me to see a rotation with investors taking profits in tech and putting money to work in the commodities space, says Joe Terranova. Personally I cashed out of IBM and put that money to work in Freeport McMoRan.

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CHINA PMI

The latest Chinese manufacturing data to be released overnight will likely move markets.

Consensus expectations are for the November purchasing managers index (PMI), a key gauge of industrial activity, to edge up to 54.80 from October's 54.70.

What’s the takeaway?

It could be a lose – lose, speculates Guy Adami. If it’s too hot investors could take it to mean more tightening is coming and if it’s low investors could take it to mean trouble.

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TWEET THE STREET GOOGLE-GROUPON DEAL

It appears the tweet de jour had everything to do with Google on Tuesday after European regulators said they were beginning an antitrust investigation into the Internet search giant.

What must you know?

Technicals don’t stack up that well, says Guy Adami. I think a lot of investors may be trapped in this one.

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WIKILEAKS TO EMBARRASS WALL STREET?

Bank of America
fell Tuesday afternoon on speculation that it might be the target of a WikiLeaks document released early next year.

In an interview published in the latest issue of Forbes magazine, the founder of the whistle-blower organization, Julian Assange, said he plans to release tons of internal documents from a major U.S. bank early next year. "It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume," he told Forbes. "For this, there's only one similar example. It's like the Enron e-mails."

While Assange wouldn't identify the bank to Forbes, he had said last year in a separate interview with Computerworld that he had several gigabytes of data from a Bank of America executive's hard drive.

A spokesman for Bank of America said in a statement: "We are unaware of any new claims by Wikileaks that pertain specifically to Bank of America."

He said that the bank was aware that Wikileaks claimed to have the computer hard drive of a Bank of America executive more than a year ago. "Aside from the claims themselves we have no evidence that supports this assertion," he said.

The Forbes story was published in the midst of a worldwide furor over a massive amount of classified diplomatic documents that WikiLeaks released on Sunday

What else must you know about these developments?

Find out from Barry Ritholtz of FusionIQ. Watch the video now!







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Trader disclosure: On November 30, 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 (TEF); Seymour owns (AAPL); Seymour owns (BAC); Adami owns (AGU); Adami owns (BTU); Adami owns (NUE); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami’s wife works at Merck; Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (BWC); Grasso owns (C); Grasso owns (CSCO); Grasso owns (JPM); Grasso owns (LPX); Grasso owns (MOT); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST); Grasso owns (X); Terranova Owns (UPL); Terranova Owns (C); Terranova Owns (PEP); Terranova Owns (VRTS); Terranova Owns (GS); Terranova Owns (OXY); Terranova Owns (OIH); Terranova Owns (AXP); Terranova Owns (FCX); Terranova Owns (AAPL); Terranova Owns (POT); Terranova Owns (NKE)

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 Brian Kelly
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Own (BG)
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (RDC)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (AAPL)
Accounts Managed By Kanundrum Capital Own (DRIV)
Accounts Managed By Kanundrum Capital Own (DRYS)
Accounts Managed By Kanundrum Capital Own (TBT)

For Scott Nations
Nations owns (SPY)
Nations owns (MSFT)

For Barry Ritholtz
Ritholtz owns (C)

For Peter Misek
Jefferies makes a market in (AAPL), (RIMM)

For Alan Zafran
Zafran Owns (BP)
Zafran Owns (YAFFX)
Luminous Capital Owns (YAFFX)
Zafran Owns (JNJ)
Zafran Owns (ABT)



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