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Watch for the S&P to Test 1256

On Tuesday, traders on the floor were talking about the monster rally in the stock market; both the Dow and S&P surging as the market closed on its highs.

It was the best day for stocks since November 30th, with energy and materials leading the way. The strength was considered significant because both sectors led the market to its bull high earlier in the year.

Can the momentum continue? How should you position now?

Guy Adami thinks the market is trading very technically; he explains that 1225 has been a key level, that’s the 50-day moving average.

Although it had been a level of resistance, “the market exploded through that level on Tuesday. The market also closed on the highs,” he says. Both are bullish signs.

“I expect to see the market now test the 1256 - 1260 level, where we had trouble a few weeks ago. What happens at that level should be interpreted as a market tell.

Trader Tim Seymour is also constructive. “Despite what’s felt like pain over the past few days, the market has been making higher lows and that’s bullish,” he says

Joe Terranova thinks gains are “a classic short squeeze.” That is, positive headlines from the US encouraged short sellers to cover their positions.

And it’s a trend that Terranova and other Fast traders expect to continue into years end.

Read More:

> Click here to go to Shorts About to Squeeze Market Higher: Fast Pro

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> DON'T MISS: Slo-o-o-w Money, 10 Top Stocks for the Long-Term Investor

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Trader disclosure: On Dec. 20, 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 INTC; Seymour is long CSCO; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Terranova is long VRTS; Terranova is long IBM; Terranova is long LQD; Terranova is long MUB; Terranova is long EMC; Terranova is long CSCO; Terranova is long AXP; Terranova is long SBUX; Terranova is long TRLG; Finerman owns AAPL; Finerman owns BAC; Finerman owns JPM; Finerman owns IBM; Finerman owns CVS; Finerman owns DIS; Murphy owns AKS; Murphy owns BAC;

Mike Khouw
Cantor Fitzgerald is a market maker in securities of AAPL
Cantor Fitzgerald is a market maker in securities of AKS
Cantor Fitzgerald is a market maker in securities of BAC
Cantor Fitzgerald is a market maker in securities of C
Cantor Fitzgerald is a market maker in securities of PNC
Cantor Fitzgerald is a market maker in securities of GS
Cantor Fitzgerald is a market maker in securities of JPM
Cantor Fitzgerald is a market maker in securities of WFC
Cantor Fitzgerald is a market maker in securities of GDX
Cantor Fitzgerald is a market maker in securities of MS
Cantor Fitzgerald is a market maker in securities of NFLX
Cantor Fitzgerald is a market maker in securities of GLD
Cantor Fitzgerald is a market maker in securities of XLU
Cantor Fitzgerald is a market maker in securities of TLT
Cantor Fitzgerald is a market maker in securities of XLF
Cantor Fitzgerald is a market maker in securities of SMH
Cantor Fitzgerald is a market maker in securities of INTC
Cantor Fitzgerald is a market maker in securities of CSCO
Cantor Fitzgerald is a market maker in securities of YHOO
Cantor Fitzgerald is a market maker in securities of IBM
Cantor Fitzgerald is a market maker in securities of CDR
Cantor Fitzgerald is a market maker in securities of ORCL
Cantor Fitzgerald is a market maker in securities of JEF
Cantor Fitzgerald is a market maker in securities of JNPR
Cantor Fitzgerald is a market maker in securities of RHT
Cantor Fitzgerald is a market maker in securities of DISH

Brent Thill
The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Oracle Corporation.

Stephen Schork
No disclosures

Mike McCormack
(T) Nomura Securities International Inc. makes a market in securities of the company

(CVC) Nomura Securities International Inc. makes a market in securities of the company.

(CTL) Nomura Securities International Inc. makes a market in securities of the company.

(CMCSA) Nomura Securities International Inc. makes a market in securities of the company.

(DTV) Nomura Securities International Inc. makes a market in securities of the company.

(DISH) Nomura Securities International Inc. makes a market in securities of the company.

(FTR) Nomura Securities International Inc. makes a market in securities of the company.

(S) Nomura Securities International Inc. makes a market in securities of the company.

(TWC) Nomura Securities International Inc. makes a market in securities of the company.

(VZ) Nomura Securities International Inc. makes a market in securities of the company.

(WIN) Nomura Securities International Inc. makes a market in securities of the company.

Brian Kelly
Shelter Harbor Capital is long KRE
Shelter Harbor Capital is long IWM



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