Dr. Doom Thinks Rally Has Legs, At Least for Now

On Wall Street, behind the scenes chatter has everything to do with gains in the S&P and whether the stock market is at the beginning of a major march higher. Stocks certainly started the new year with a bang, the S&P 500 gained nearly 7 percent in about 6 weeks

The sheer force of the rally as well as the inability of sell-offs to gain traction has forced skeptics such as Fast traderSteve Grasso to completely re-think positions.

And from what we’re hearing – Grasso is hardly alone - a major market skeptic is changing his tune.

The perennially negative Nouriel Roubini – nicknamed Dr Doom for his usually critical views – is turning bullish. You read that right, Roubini is betting on additional stock market gains.

“We’re a believer; we’re celebrating. We think the rally has legs,” explains Gina Sanchez, Roubini’s director of equity and allocation strategy. (She is also a CNBC contributor.)

She tells us that Roubini’s firm currently recommends being overweight equities, playing cyclical areas of the market such as technology. “Also we’d take some tilts into staples and telecom to collect yield. And we’d also be overweight ag and livestock. Generally we’d take advantage of the risk rally.”

She topped off the forecast by adding that investors have months to make money. And that’s when this song came to a screeching halt – months.

Roubini and company are only bullish until mid-year.

Over the next few months, Roubini's firm thinks the markets will be buoyed by the Federal Reserve and the ECB, as they move forward with policies that keep rates low – which in turn will compel investors to put money into the stock market in their quest for return.

Into the second half of the year, however, their outlook is very different. “Our forecast for year’s end is 1300,” explains Sanchez. “We expect to end the year lower from where the market is now.”

She goes on to says that Roubini does not believe global markets are past the point of crisis – not by a long shot. “Liquidity doesn’t solve solvency problems – we can either write them off – inflate them or default – those are the only choices,” she says.

In addition, Roubini remains concerned by payrolls. “We’re seeing a lot of positive (headline) numbers in employment but payrolls aren’t going anywhere,” Sanchez says.

“And in the second half Sanchez expects earnings will start to disappoint.

“Celebrate now,” Sanchez says. Later in the year the market will again face challenges.

What do you think? We want to know!

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Trader disclosure: On Feb. 7, 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 VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long IBM; Terranova is long EMC; Terranova is long AXP; Terranova is long AAPL; Terranova is long TRLG; Terranova is long JOY; Terranova is long SNDK; Terranova is long MCD; Terranova is long MA; Terranova is long OXY; Terranova is long SU; Terranova is long CNX; Terranova is long CSCO; Terranova is long SBUX; Terranova is long FXE; Terranova is long TBT; Cortes is long MO; Cortes is long SO; Cortes is long Treasuries; Cortes is short SINA; Cortes is short BAC; Cortes is short Silver;

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