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Pro Trader: Stock Market Needs to Prove Itself Wednesday

On Tuesday investors were struggling to make sense of the market moves, after both the S&P and the Dow plunged at the open but then clawed their way above break-even and then closed higher - in the case of the Dow, higher by triple digits.

Again, the headlines out of Europe whipsawed the market with news out of Italy at first spooking the market, then cheering it.

Specifically, reports out of Rome said Silvio Berlusconi, the country's prime minister, no longer held a majority and would resign. At first the market didn’t like the uncertainty but then learned a new leader could act more aggressively to tackle the country's debt problems.

By the close, all 10 S&P 500 sectors rose, however the Fast pros were most focused on banks, which generally suffer whenever Europe fears surge. On Tuesday they did particularly well.

”Just look at the action in Wells Fargo and USB,” says Jon Najarian. “Both are outperforming.” And the positive sentiment extends to overseas banks, too. “UBS and Deutsche Bank are also outperforming,” Najarian adds.

What does the action mean for the market?

Najarian takes the action to mean that optimism is returning to the market.

As a result trader Guy Adami says Wednesday will be a critical day. "On Wednesday the market needs to prove itself,” he says.

How exactly does Adami think the market can prove itself?

”1275 is a key level – it’s the 200-day, and where we closed on Tuesday,” Adami explains. “If we close above 1275 on Wednesday, the bull market will have proved itself. If we see that, there’s no reason the market shouldn't drive all the way to 1350. That would suggest to me the US stock market is in full bull mode."

Trader Joe Terranova fully expects the market to prove itself.

“There’s a chase for performance in the market,” he says. In other words, the fear in the market is not holding stocks and missing the next leg higher.

Trader Karen Finerman understands the thesis and agrees the next move will probably be a big move. However she thinks the market could go either way.

“If Europe gets better the valuations in the S&P are too compelling to not go long,” she says, “but if another shoe drops – we could quickly go the other way.”





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Trader disclosure: On November 8, 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 is long BAC; Seymour is long GLD; Seymour is long FCX; Seymour is long INTC; Finerman owns AAPL; Finerman owns BAC; Finerman owns GOOG; Finerman owns MSFT; Finerman’s firm has short calls AAPL; Finerman’s firm has short calls IBM; Finerman’s firm owns MSFT; Finerman’s firm has short calls WMT; Adami Owns AGU; Adami Owns C; Adami Owns GS; Adami Owns INTC; Adami Owns MSFT; Adami Owns NUE; Adami Owns BTU; Terranova is long CAT; Terranova is long CVI; Terranova is long VRTS; Terranova is long APC; Terranova is long F; Terranova is long EMC; Terranova is long AAPL; Terranova is long IBM; Terranova is long JOYG; Terranova is long LULU; Najarian has long call spreads AAPL; Najarian has long call spreads AKS; Najarian has long call spreads BAC; Najarian has long call spreads WFC; Najarian has long call spreads JPM; Najarian has long call spreads RAX; Najarian has long call spreads ANR; Najarian has long call spreads MRVL; Najarian is long CBOE; Najarian is long CME; Najarian is long CIGX

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