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Time to Take S&P Profits, Already?

On Thursday, money pros were trying to figure out if they should take profits, already; whether the new year rally was already out of steam.

Investors worried that Italian bond auctions and Spanish bond auction scheduled for next week might not go well, spook markets, and trigger a sharp sell-off. Both Italy and Spain are considered to be at the core of theEuropean debt crisis.

Trader Steve Cortes says, if you have gains, take them now. He thinks the stock market is heading for a brick wall.

“In the coming days and weeks I expect Europe’s woes to pull down equities,” says Cortes. “We’re hearing that although China and Europe are in trouble, the US is fine – and that alone should drive the S&P but I don’t agree.”

Cortes argues that the fortunes of United States are co-joined with the fortunes of Europe and China. “And right now China is slowing dramatically and Europe is a basket case. It’s a global economy.”

To support his thesis he says look at the action in the Shanghai Composite and the euro. “It’s almost identical,” he says. “And almost every day the Shanghai hits a new low.”

And until quite recently the euro and the S&P have traded in lock-step. That’s because a weak euro makes the dollar stronger and in turn, that makes commodities nominated in dollars more expensive for buyers using other currencies.

Trader Jon Najarian is on the other side of the trade. “I don’t see any evidence that Europe is in a deep recession,” he says. And the latest data out of the US suggests the recovery is gaining strength.

According to the latestADP numbers, private employers added 325,000 jobs in December, easily beating economists' expectations.


Also, domestic consumption in the US is 70% of GDP, adds CNBC Contributor Ron Insana. We’re a consumption oriented economy and we can survive on our own.

"Just look at the gains in Bank of America," adds Najarian. "They're on a tear - and for good reason. He thinks it's a sign the Street expecting an increase in loan demand in anticipation of improvement in the housing market.

What do you think? We want to know!

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Trader disclosure: On Jan. 5, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian is long call spreads AAPL; Najarian is long call spreads BAC; Najarian is long call spreads C; Najarian is long call spreads JPM; Najarian is long call spreads ORCL; Najarian is long call spreads DNDN; Najarian is long call spreads PNC; Najarian is long call spreads FDO; Najarian is long call spreads DLTR; Najarian is long call spreads DG;

Patty Edwards
Trutina Financial is long AAPL
Trutina Financial is long ORCL
Trutina Financial is long GLD
Trutina Financial is long TAL
Trutina Financial is long COST

Win Thin
Brown Brothers Harriman makes a market in the Euro dollar.

Nishu Sood
DR HORTON - Deutsche Bank owns 1% or more of this company and has received non-investment banking related compensation from this company within the past year.
MDC HOLDINGS - Deutsche Bank owns 1% or more of this company.

Clayton Moran
The Benchmark Co., LLC analyst(s) whose name(s) appears on the front page of this research report certifies that the recommendations and opinions expressed herein accurately reflect the research analyst's personal views about any and all of the subject securities or issues discussed herein. Furthermore, no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst(s) in this research report.

Colin McGranahan
Bernstein currently makes a market in the following companies BBBY / Bed Bath & Beyond Inc, COST / Costco Wholesale Corp, SPLS / Staples.
The following companies are or during the past twelve (12) months were clients of Bernstein, which provide non-investment banking-securities related services and received compensation for such services LOW / Lowes, TGT / Target Corp.
In the past twelve (12) months, Bernstein or an affiliate managed or co-managed a public offering of securities of DG / Dollar General Corp.
In the past twelve (12) months, Bernstein or an affiliate received compensation for investment banking services from DG / Dollar General Corp.
In the next three (3) months, Bernstein or an affiliate expects to receive or intends to seek compensation for investment banking services from DG / Dollar General Corp.

Aaron Rakers
Stifel, Nicolaus & Company, Inc. makes a market in the securities of Western Digital Corporation. Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from Western Digital Corporation in the next 3 months. Stifel, Nicolaus & Company, Inc. makes a market in the securities of Seagate Technology, Inc.. Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from Seagate Technology, Inc. in the next 3 months. Seagate Technology, Inc. is provided with non-investment banking, securities related services by Stifel, Nicolaus & Company, Inc. or an affiliate or was provided with non-investment banking, securities related services by Stifel Nicolaus or an affiliate within the past 12 months.
Andy Hargreaves
Pacific Crest makes a market in the shares of Apple Inc.



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