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As Exhausted Money Managers Cash Out, S&P Should Rise

On Friday investors were trying to determine if the stock market would make peace with the woes of Europe – at least through the end of the year.

Even as the Dow pared gains and traded into negative territory, the Fast Money traders said as of Monday - after expirations - the path of least resistance is now higher.

“Money managers are exhausted,” explains trader JJ Kinahan. “This is the toughest year I can ever remember and money managers remain unsure what lies ahead."

Kinahan goes on to say, money pros are eager for a two week break, they just want to begin the holiday.

“And as a result, they’re just parking money in bonds.”

As big money takes a rest, Kinahan expects volumes to be very light over the next two weeks, and because of light volumes he’s looking for the market to rally into year’s end.

“Never sell a dull market,” he counsels. "Into the end of the year I'm looking for the market to go higher."

Not only does Kinahan expect to see short covering as pros move to the sidelines but he also thinks investor will begin to establish new longs over the next few weeks.

Both Pete and Jon Najarian share the view. They point to action in the Vix as confirmation. “The Vix is down sharply," says Jon. “The fear factor is coming out of the market.”

Fundamental catalysts seem to support the thesis. Data this week showed jobless claims fell to a 3-1/2-year low last week and factory activity in parts of the U.S. Northeast picked up in December.

Trader Steve Grasso doesn't agree. "I'm skeptical," he says, "I'd hide out in utilities."


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Trader disclosure: On Dec 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MH; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Kinahan is long C; Kinahan is long MSFT and short calls; Kinahan has INTC short puts; Kinahan is long YHOO

For Greg Salvaggio
No disclosures

For Kena Sena
YAHOO (YHOO): Evercore or an affiliate expects to receive or intends to seek compensation for investment banking services from this subject company

For Toni Sacconaghi
Bernstein currently makes a market in the following companies AAPL / Apple Inc

For Tavis Mccourt
McCourt is long GLD
McCourt is long GOLDCORP
McCourt is long ELDORADO
McCourt is long BARRICK

For Jeff Kilburg
Kilburg is long 10 year treasuries
Kilburg is long 30 year treasuries



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