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False Sense of Security in Market After Jobs Report: Traders

Again the stock market posted gains on Friday with investors trying to determine just how much more upside could be in store.

The S&P traded above 1340 on Friday, a 3 ½ year high, while the Dow touched it highest levels in 5 years. As impressive as those statistics are, the biggest superlative was generated by the Nasdaq; it made an 11-year high.

Largely the catalyst was a better than expectedjobs number, which showed the U.S. economy created jobs at the fastest pace in nine months. The data also showed unemployment dropped to 8.3%, nearly a three-year low.

If the domestic recovery is really gaining traction, are the markets moving into a new bullish paradigm? Or is the strength already priced in, and then some?

What should you make of the market?

Strategy Session with the Fast Money traders

Largely the Fast Money traders believe the market is ahead of itself. “We’ve gone very far, very fast,” says trader Patty Edwards. “I’d take a little off the top.” Trader Zach Karabell says much the same. “It’s prudent to take profits,” he says.

“We’re about 3% above levels where I thought we’d have trouble,” echoes trader Steve Grasso. Bond trader Jeff Kilburg shares the sentiment too. “There’s a false sense of security in the equities market – we’ve moved too fast. The bond market is signaling there’s more pain to come.”

That's not to say in the long-term the traders don't think the market can go higher - it's just they think the path of least resistance right now is probably lower.

If you’re looking for trading ideas in this environment of extreme uncertainty, Steve Grasso suggests longAltria . “With that one you can sleep at night,” he says.

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Trader disclosure: On Feb 3, 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 AAPL call spreads; Najarian is long BAC call spreads; Najarian is long PNC call spreads; Najarian is long GS call spreads; Najarian is long GDX call spreads; Najarian is long NFLX call spreads; Najarian is long RIMM call spreads; Najarian is long GNW call spreads; Najarian is long MOS call spreads; Grasso is long AVAV; Grasso is long ASTM; Grasso is long BA; Grasso is long D; Grasso is long LIT; Grasso is long MHY; Grasso is long MO; Grasso is long PFE; Grasso is long PRST; Grasso is long S; Grasso is long XLU; Karabell is long AAPL; Karabell is long IBM; Karabell is long TGT; Karabell is long MOS calls; Karabell is long GOOG

For Steve Grasso
Stuart Frankel & its partners own CSCO
Stuart Frankel & its partners own CUBA
Stuart Frankel & its partners own GERN
Stuart Frankel & its partners own HPQ
Stuart Frankel & its partners own HSPO
Stuart Frankel & its partners own MU
Stuart Frankel & its partners own NYX
Stuart Frankel & its partners own PRST
Stuart Frankel & its partners own XRX
Stuart Frankel & its partners own ZNGA

For Patty Edwards
Trutina Financial is long AAPL
Trutina Financial is long C
Trutina Financial is long GLD
Trutina Financial is long JNK
Trutina Financial is long INTC
Trutina Financial is long CME
Trutina Financial is long PM
Trutina Financial is long KMP
Trutina Financial is long HSY

For Zach Karabell
River Twice is short XLF
River Twice is short SMH

For Jeff Kilburg
Kilburg is long TLT

For Rebecca Patterson
No disclosures

For Robin Farley
(WYNN): Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.

For Colin Gillis
(AAPL): Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Apple within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Apple.
(GOOG): Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Google within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Google.

For Mark Mahaney
William Reinhardt, CFA, Associate, holds a long position in the securities of Google Inc.
Steven J Fullerton, Associate, holds a long position in the securities of Google Inc.
Neil A Doshi, Associate, holds a long position in the securities of Google Inc.
Rohit Thapliyal, Associate, holds a derivative position in the securities of Amazon.com Inc.
A member of the household of Wenge Yang, Associate, holds a long position in the securities of eBay Inc.
Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of eBay Inc, Netflix Inc. This position reflects information available as of the prior business day.
Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of Groupon, Inc., Google Inc.
Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12 months from Groupon, Inc., Google Inc, eBay Inc.
Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from Groupon, Inc.,
Google Inc, Amazon.com Inc, eBay Inc in the past 12 months.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as investment banking client(s): Groupon, Inc., Google Inc, eBay Inc.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities-related: Groupon, Inc., Google Inc, Amazon.com Inc, eBay Inc.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non-securities-related: Groupon, Inc., Google Inc, Amazon.com Inc, eBay Inc.
Citigroup Global Markets Inc. or an affiliate received compensation in the past 12 months from Groupon, Inc..
Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability which includes investment banking revenues.
The Firm is a market maker in the publicly traded equity securities of Groupon, Inc., Google Inc, Amazon.com Inc, eBay Inc, Netflix Inc.




CNBC.com with wires.