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Update: Meaningful Breakout In Market?

Despite chatter last week that the market was overbought, again the bulls pushed the S&P 500 even higher on Monday after solid earnings combined with a flurry of merger news boosted investor appetite for equities.

Take a look at some of the big deals that went down:


Company Target Industry
Danaher Corp. Beckman Coulter Medical Devices
Ensco Pride International Offshore Drilling
AOL Huffington Post Media

Investors take the deal activity to mean Corporate America views stock valuations as attractive.

In fact the tone of the Street has changed from negative to positive and instead of an impending correction, investors are now chattering about a meaningful breakout with the S&P above the high end of its recent range.

Technically, it's considered a sign of strength; a sign that stocks could go much higher.

What should you make of it? How should you position now?

Instant Insights with the Fast Money traders

Jon Najarian is impressed by all the deal-making. “A lot of folks who thought the market was overextended are now saying if smart guys are stepping in a committing billions, it’s a positive sign. I take it as one more reason not to fight this tape.”

Although Brian Kelly has been bearish, he says “you just can’t fight this market.” In fact, he’s hearing a lot of investors are throwing in the towel on the short side. “A lot of money is being put to work and there’s probably value in the market if you believe the economy is getting better,” he says.

Yes, he's been looking for a correction too, but Guy Adami admits that he wouldn't fight the tape. "The market doesn't typically give investors this long to sell the highs," he says. "It probably means we go higher."

Tim Seymour thinks the market action may be a positive sign for blue chips. GE , Pfizer , Exxon , Alcoa, Chevron, DuPont, Caterpillar and Disney are all at or near their 52-week highs. “I think big cap should continue to work if you believe the economy will continue to work,” he says.

Steve Grasso feels the riots in Egypt were a bullish ‘tell’ because events could have been a much more negative for stocks than they were. “Egypt showed us point blank what the support is in the market. And its 1275.” In other words, despite the negative catalyst stocks didn’t slip lower than 1273 and Grasso thinks that makes investors more confident.

Zach Karabell thinks recent strength in the market should be put in context. “The strength comes off a decade that has been a big fat zero. I think we could still have a significant move higher but remain in the context of a very middling period of time.”

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IS THE OIL TRADE OVER?

With oil closing lower for the third straight session, how should you trade oil?

Dennis Gartman suggests watching the contango in oil which, he says “has been widening everyday for weeks. It’s saying there’s more than enough oil above ground."

He also suggests keeping an eye on geo-political concerns. "Now that Egypt has moved to page 7 from page 1 it’s no surprise that crude comes down."

So what's next? When asked if he had to choose between $75 and $100 as oil's next stop he replies "that crude will probably print $75 before it prints $100."

Check out the entire interview. Watch the interview now.




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Trader disclosure: On Feb 7, 2011, 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 (AA); Seymour owns (AAPL); Seymour owns (BAC); Seymour owns (F); Seymour owns (FXI); Seymour owns (GE); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Karabell owns (VALE), (CSCO), (FCX), (BRCM), (IBM), (GOOG), (AAPL), (RIMM), (GS), (C), (FXI), (AOL); Pete Najarian owns (BAC) call spreads; Pete Najarian owns (CNI); Pete Najarian owns (C); Pete Najarian owns (F) calls and bonds; Pete Najarian owns (GE); Pete Najarian owns (GM); Pete Najarian owns (JPM) call spreads; Pete Najarian owns (MS); Pete Najarian owns (PEP); Pete Najarian owns (TCK); Pete Najarian owns (V) call spreads; Pete Najarian owns (VZ) calls; Pete Najarian owns (YHOO)

For Brian Kelly
Accounts Managed by Kanundrum Capital Own (ATW)
Accounts Managed by Kanundrum Capital Own (BAC)
Accounts Managed by Kanundrum Capital Own (DAL)
Accounts Managed by Kanundrum Capital Own (EBAY)
Accounts Managed by Kanundrum Capital Own (GLD)
Accounts Managed by Kanundrum Capital Own (IAU)
Accounts Managed by Kanundrum Capital Own (MCP)
Accounts Managed by Kanundrum Capital Own (MS)
Accounts Managed by Kanundrum Capital Own (RDC)
Accounts Managed by Kanundrum Capital Own (SLV)
Accounts Managed by Kanundrum Capital Own (DRYS)
Accounts Managed by Kanundrum Capital Own (JEF)
Accounts Managed by Kanundrum Capital Own The U.S. Dollar
Accounts Managed by Kanundrum Capital Are Short the Australian Dollar
Accounts Managed by Kanundrum Capital Are Short The Yen

For Zachary Karabell
River Twice Capital is short (SPY)
River Twice Capital is short (ELF)
River Twice Capital is short (XLI)
River Twice Capital is short (SMH)
River Twice Capital owns (BRCM)
River Twice Capital owns (CSCO)
River Twice Capital owns (IBM)
River Twice Capital owns (MSFT)
River Twice Capital owns (GS)
River Twice Capital own (VALE)

For Dennis Gartman
Funds Managed by Dennis Gartman are long Canadian Dollars
Funds Managed by Dennis Gartman are long Australian Dollars
Funds Managed by Dennis Gartman are long Gold
Funds Managed by Dennis Gartman are long Wheat
Funds Managed by Dennis Gartman are long Corn
Funds Managed by Dennis Gartman are long Soybeans
Funds Managed by Dennis Gartman are long Sugar
Funds Managed by Dennis Gartman are long Crude
Funds Managed by Dennis Gartman are long Nat Gas
Funds Managed by Dennis Gartman are short The Euro
Funds Managed by Dennis Gartman are short The Sterling
Funds Managed by Dennis Gartman are short The Yen

For Pete Najarian SOT
Pete Najarian owned (PEP) on 2/4/2011

For David Bank
RBC Capital Markets is currently providing (DIS) with non-securities services
RBC Capital Markets has provided (DIS) with non-securities services in the past 12 months

For Todd Gordon
Aspen Trading Group is long the Sterling vs. the Australian Dollar for clients

For Fast Fire
Pete Najarian owned

(NKE) call spreads on 12/20/2010

For Mike Khouw
No disclosures on (RL)

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GE owns 49% of CNBC



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