Bullish Market Pause or Will Sell-Off Gain Traction?

On Monday chatter on the floor had everything to do with the pause underway in the S&P and whether stocks were about to run into serious resistance.

The S&P has rallied for five straight weeks, helped in part by a run of better-than-expected U.S. economic data that was capped by Friday's solid employment report. The broad-based index is up nearly 7 percent for the year.

Is the market at the top of its range?

The Fast Money traders don’t think so. “I wouldn’t even call this a sell-off,” says Pete Najarian,” it’s a pause.”

“My clients are still in bullish camp,” adds Steve Grasso. “Lately sell-offs have not gained momentum.”

“I would not look at this as a top either, “adds Trader Josh Brown. “I think the market is pausing on a Monday after huge job reports.”

Michael Harris of Campbell Trading tells us that technicals confirm the Fast traders’ outlook.

“We have a very firm trend line in the market,” he says, “an up-trend has been in tact for at least the last 4 months.”

Also he says recent signals have been very bullish. “On January 3rd we broke above the 200-day and on January 31 the 50-day crossed the 200-day; something called the golden cross.”

And looking at fundamentals, he adds “we all know just how much cash is on the sidelines. As the retail community starts to understand the market has moved 25% in the last 4 months – if those folks get involved in the market and some of that cash gets put to work, you can only imagine where the trend goes from there.

All told, Harris says the march higher should continue. Of course that begs the question – what levels should you be watching to confirn the bullish thesis?

Harris says for the next key ‘tell’ - watch 1354 – the July high of last year.

And then he says 1374 will be significant. That’s the high level made right after military forces killed Osama bin Laden.

But if we get though those levels he says, “it’s up, up and away.”

And looking at the downside, Harris tells us not to be concerned about a pull back unless the market breaks below 1260.

He thinks 1300 is a near term bottom with the 200-day around 1260. In other words those levels should provide support.

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Trader disclosure: On Feb 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; P. Najarian is long AAPL; P. Najarian is long BAC calls; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long MS; P. Najarian is long YHOO; 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; Najarian is long FIO; Najarian is long MOTR; Brown is long AAPL; Brown is long JPM; Brown is long COP; Brown is long BRK.B

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 Brian Kelly
Shelter Harbor Capital is long SPY calls
Shelter Harbor Capital is long TLT
Shelter Harbor Capital is long US treasuries

For John Blackledge
The subject company (NFLX) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.
Credit Suisse provided investment banking services to the subject company (NFLX) within the past 12 months.
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (NFLX) within the next 3 months.
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company (NFLX).

For David Flynn
No disclosures

For Michael Harris
Campbell is long the March 2012 S&P 500 futures contract

For Stephen Anderson
No disclosures

For Dan Dicker
Dicker is long GLEN
Dicker is long Oil
Dicker is short HFC

For Jagadish Iyer
Piper Jaffray usually provides bids and offers for the securities of Corning Incorporated and will, from time to time, buy and sell Corning Incorporated securities on a principal basis. Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

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