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Dow Dives 199

DOW DIVES 199

The headline: Crude Prices and Inflation Report Spook Stocks...

As crude oil went higher, stocks went lower Tuesday. The Dowsuffered a triple digit loss while declining issues topped advancers by a nearly 2-to-1 margin.

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$129 AND COUNTING

The headline Crude Oil Leaps 1.6% To $129.07, 3rd Record In As Many Sessions.

Oil prices spiked to a new trading high Tuesday, sweeping toward $130 a barrel as supply concerns intensified the momentum buying that has lifted crude deeper into record territory. Gasoline, meanwhile, reached an average of $3.80 at the pump for the first time.

Core inflation, which strips out volatile food and energy prices, rose twice as fast as expected and hit its fastest annual pace in more than 16 years. I think we’ve lost the consumer, says Joe Terranova and that spells big problems for the market.

If you’re looking for a trade stick with oil exploration, he adds. Maybe check out Transocean .

Or look at Apple ,Research In Motion and Google , they all got taken out to the woodshed on the day's news, adds Pete Najarian.

I think the trade is Trinity Industries , says Guy Adami, if for no other reason than it’s working.

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NOT JUST OIL

The headline Natural Gas, Gold Prices Jump Today as the Commodity Bull Market Looks to Be Back On...

Gold rose to its highest level in almost a month on Tuesday as record-high oil prices fuelled fears of accelerating inflation, but a drop in global demand for the precious metal caused some concern. Meanwhile strength in crude also propelled natural gas higher.

For a commodities play I like the BRIC countries right now, says Joe Terranova. And Brazil doesn’t have the energy crisis that we have domestically.

I don’t agree, counters Pete Najarian. The iShares MSCI Emerging Markets Indx didn’t perform well today. I prefer the coal names.

I think the two best ways to play commodities right now are US Steel and Freeport McMoRan , adds Guy Adami. And in nat gas look at Nucor .

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HOME DEPOT DOWN 6%

The headline: Home Depot Profit Plunges 66% As Cash-Strapped Consumers Curtail Spending.

Home Depot said quarterly profit fell 66 percent as the U.S. housing meltdown hurt sales and it took a charge to close stores and curb expansion plans.

"The housing and home improvement markets remained difficult in the first quarter; in fact, conditions worsened in many areas of the country," Home Depot Chairman Frank Blake said in a statement.

I can’t imagine jumping into this stock right now, says Pete Najarian.

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WALL STREET'S JILTED LOVER: TECH

The headline Tech Stocks Slammed Just As Wall Street Was Beginning To Embrace Them.

Both Inteland Microngot hammered on Tuesday after a Lazard analyst predicted a drop in flash-memory chip prices.

The only name I like in the space right now is Intel, says Pete Najarian.


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CARL & COMPANY

The headline: Investing Heavyweights Pickens, Paulson & Loeb Backing Icahn To Force Change At Yahoo.

Legendary Texas billionaire Boone Pickens might be known for his insights on crude oil but he’s also placing another big bet, this one on Yahoo! In a CBNC exclusive, Boone said, "Because of Carl Icahn I’m an (owner) of Yahoo! too… 10 million shares. He goes in first and I’ll jump in behind him.”

That’s just fine for these rich guys, but I don’t want to be long Yahoo!, counsels Jeff Macke.

I think investors should be long Google, says Joe Terranova.

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DOLLAR DESTINED FOR DUMPS?

The headline: Dollar Falls Most Against Euro In More Than A Month

The dollar fell the most in a month on Tuesday as U.S. inflation data added to concerns about the economy's strength and raised doubt about whether the Federal Reserve will be able to hike interest rates this year.

I like getting long the Canadian dollar, says Joe Terranova.

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OPTIONS ACTION:HEALTH NET

The headline: Pete Najarian Seeing Unusual Options Activity

Options investors are buying large volumes of the June 30-calls explains Najarian. This suggests the Health Netstock could go higher.

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BANK BOTTOM-FISH AND DROWN

The headline Put Activity In Financials Suggests More Pain Ahead For Wall Street

Options investors are buying large volumes of puts in the Financial Select Sector SPDR , says Jon Najarian. I don’t think they’re just protecting long – I think they’re trying to profit from a downturn.

Is the market going into the tank this summer?

No, I don’t think so. But we won’t break until we see crude oil not react positively to what should be bullish, replies Jon Najarian. Until then we’re probably sideways.

What’s the bottom line?

I’d be a short-term put buyer on the XLF, says Najarian. It could go to $23.





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Trader disclosure: On May 20, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (NUE), (BTU),(MSFT),(INTC),(C ), (GS), (AGU); Najarian Owns (AAPL), (NOK), (DRYS), (HPQ), (XLF) Puts; Macke Owns (INTC), (HAS), (DIS), (WMT), (MSFT); Terranova Owns (SUN), (FXC), (GS), Crude; Terranova Is Short (HES), (WYNN)

Jon Najarian Is Short (IJN), (EEM)

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