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Terranova: S&P Rally Confirmed if Euro Breaks Above This Level

Stocks rallied again on Wednesday, with investors cheered by signs that Greece was on track to meet requirements necessary to receive more aid.

Adding to the positive momentum Italian Prime Minister Silvio Berlusconi won a confidence vote on an austerity plan for Italy, the euro zone's third-largest economy.

"What we're seeing is that global hedge funds, at least momentarily, are throwing the risk-trade switch back on, directing funds away from safe havens and into global equities," explains Fred Dickson, chief market strategist at D.A. Davidson & Co. in a Reuters interview.

Now the question becomes – how long will the switch say on?

Will the bulls gather enough momentum to keep the rally going or will technical levels present resistance that they can’t overcome?

Fast Trader Joe Terranova thinks the future of the rally is very much tethered to the action in the euro.

He’s watching 138.37 as a key level the July 12th low. “It had been support and now it’s resistance,” he says. “It’s important to see what happens. If the euro breaks above, the S&P rally should continue and if it doesn’t the S&P probably gives back gains.”

Trader Guy Adami thinks the latter is more likely. “Stocks sold off late day,” he says, “that’s troublesome for the bulls – my sense is that the rally is to be sold. Adami thinks 1225 will be the top in the S&P and he continues to believe that the S&P will retest 1020 – another key level.

Always a fundamental investor Karen Finerman sees far too many negative catalysts to feel bullish. “I wouldn’t jump into the rally with both feet – at all.”

She thinks the relief over Greece is completely misplaced. Developments “do nothing to address the other shoes that can drop in Europe. I expect to see more uncertainty,” she says.







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Trader disclosure: On Sep 14, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Finerman and Finerman’s firm own (AAPL); Finerman owns (BAC) and Finerman’s firm own (BAC) leaps; Finerman owns (JPM) and Finerman’s firm owns (JPM) stock and (JPM) leaps; Finerman’s firm owns (IBM); Finerman owns (GOOG); Finerman’s firm and Finerman own (ORCL); Finerman’s firm and Finerman own (MSFT); Finerman’s firm owns (TGT); Scaramucci owns (GS); Scaramucci owns (GOOG); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Terranova owns (OXY); Terranova owns (HOS); Terranova owns (WFM); Terranova owns (OIH); Terranova owns (CVI); Terranova owns (AXP); Terranova owns (EMC); Terranova owns (AMZN); Terranova owns (WFC); Terranova owns (AAPL); Terranova owns (IBM)

For Anthony Scaramucci
One of 8 national finance chairs for Mitt Romney campaign
Held a fundraiser for Mitt Romney
Has contributed to the Romney campaign

For Dan Dicker
Dan Dicker has options positions in oil futures

For Whitney Tilson
**No Disclosures

For Joe Terrranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
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Virtus Investment Partners Owns More Than 1% Of Domino's Pizza UK & IRL PLC



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