Can We Trust This Rally?

Wall Street's rally was short-lived as the markets returned to grim
reality Monday.
Dylan Ratigan, the moderator of CNBC's "Fast Money" TV show, noted the
markets fell for the first time in five days.

Still, Guy Adami was optimistic, saying the S&P looks technically
fine. Karen Finerman said today's market is not much different from a
week ago. She said the economy is deteriorating further, and she's
worried about a "bad" jobless number on Friday.

Joe Terranova agreed, saying people are going to sit back and wait in
this "cautious investing environment." "You've got to get some
conviction beyond Friday that we can stay above 8,900."

Ratigan said there appears to be an "obsession with risk and unknown
variables for months to come." That means there's a lot more reason
for investors to sit back and take limited risk as opposed to trying
to jump back in, he said.

Jeff Macke said that line of thinking leads you to a trader's market,
in which investors will be taking gains in companies that they
wouldn't be expecting moves in.

Ratigan asked Terranova on his thoughts on crude oil, which was up for
the third consecutive day. Terranova said today's rise was tied to the
fact that U.S. government saying it is going to purchase 12 million
barrels of oil on the open market.

Terranova said oil is not going to surge above $100 a barrel. Rather,
he said, it's going to be one of tactical trading in which investors
see a little bit of rally alternating with a little pullback.

Terranova said he didn't think the current Israeli incursion into Gaza
as something investors use to go long on oil. That's because the
conflict is part of something that has been going on politically for
three decades, he said.
On the other hand, he said there is a good fundamental reason to get
behind natural gas as a result of Russia's quarrel with Ukraine over
natural gas prices. "That's certainly a more tradable theme than oil,"
he said.

Ratigan asked the panel to comment on the dismal auto sales in
December, with General Motors(GM Quote - Cramer on GM - Stock Picks),
showing a 31% drop and Chrysler a 53% drop. Terranova said people
simply are not going to go out and make a "risky" purchase. Finerman
said the auto stocks are headed lower because "the debt is telling you
they're going under."

Ratigan then read a list of 2009 surprises from Byron Wien, of Pequot
Capital Management. They include the S&P rising 30% to 1,200, gold
heading up to $1,200, oil rising to $80 a barrel, a serious downward
slide in the dollar and NY state threatening bankruptcy.

The forecasts drew skeptical comments from the panelists. Adami and
Finerman had their doubts about gold heading up to $1,200,while
Terranova questioned the slide in the greenback.

Ratigan asked Arthur Laffer, the noted supply-side economist, to
comment on reports of Obama's stimulus plan, including a proposal for
a huge tax cut for individuals and businesses.

Laffer said there has to be tax rate reductions for tax cuts to be
meaningful. He also did not see much of a stimulus in Obama's proposed
tax rebates for previous taxes paid.

He said the stimulus package is going to hurt the economy because it
will result in a higher tax burden for the populace.

Ratigan talked with chartist Carter Worth, from Oppenheimer, to get
his take on the new year. Worth said he expects the S&P to trade in a
30% range for the year. In this kind of market, he said investors will
be selling into rallies and buying stocks that are being sold off.