China Slowdown, S&P Bull Catalyst or Danger Signal?

On Tuesday investors were wondering what to make of the market with the most recent S&P gains largely tethered to weak economic data from Beijing – that’s right weak.

The latest numbers showed that although China's economy grew, the expansion was at its weakest pace in 2-1/2 years.

Typically, signs of slower growth would empower bears, but not this time.

These developments triggered S&P buying due to a growing belief that weaker data will compel Beijing to ease rates.

But is bad news from China really a bull catalyst?

Trader Steve Cortes sure doesn’t think so. In fact, he thinks that thesis is not only misguided but perilous.

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“Right now the market says bad news from China is good news,” he concedes, “but by saying that the market is putting a dangerous level of confidence in Beijing to soft land the second largest economy on earth. No small group has ever been able to do that in any economy.”

To support his belief that a sell-off is coming, he points to the action in the Shanghai Composite, which has traded poorly over the past couple of months. “The trajectory matters – and the trajectory points lower.”

Trader Josh Brown feels differently. He believes history sides with the bulls. “China is now in a rate cutting cycle – the last 3 times EM cut rates in concert, they were all buying opportunities,” he says.

Trader Keith McCullough is also bullish. He says if you dig down into the China data, you'll find clearly bullish catalysts. “What matters to the market is industrial growth in China and that metric accelerated versus Nov,” he says.

Looking at other market influences, top hedge fund manager Anthony Scaramucci cites another reason for skepticism.

“Over the last 3 weeks we’ve seen a great deal of short covering in the US market. In fact, short interest is now at its lowest level in 12 months – that doesn’t auger well for the markets.”

Technical analyst Abigail Doolittle adds the charts don’t look good.

“I think we’re in a low volume melt-up,” he says due to a pattern she calls a bearish rising wedge. Although the S&P could push higher, I think it puts in an apex at 1350 – then, I suspect the pattern will break down.”

What do you think? We want to know!

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Trader disclosure: On January 17, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova is long V; Terranova is long CSCO; Terranova is long TRLG; Terranova is long JNPR; Terranova is long DECK; Terranova is long NFLX; Terranova is long XOM; Terranova is long SBUX; Terranova is long AXP; Terranova is long EMC; Terranova is long MUB; Terranova is long IBM; Terranova is long UNG April $5 puts; Scaramucci is long GOOG; Scaramucci is long JPM; Scaramucci is long GS; Scaramucci is long IBM; Edwards is long PM; Dicker is long Vale; Dicker is long CHK

For Anthony Scaramucci
Anthony Scaramucci is one of 8 national finance chairs for Mitt Romney campaign
SkyBridge Capital Is A Fund Of Funds Manager
Scaramucci held a fundraiser for Mitt Romney and contributed to the Romney campaign

For Patty Edwards
Trutina is long Apple (AAPL)
Trutina is long SPDR Gold Trust (GLD)
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Trutina is long EBAY
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For Chris Danley
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CNBC.com with wires.