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Stocks Shake Off Oil Rebound

STOCKS SHAKE OFF OIL REBOUND

The headline: Roller Coaster Day Ends Higher

The Dow rose on Wednesday as a surprisingly sharp gain in U.S. business investment offset renewed credit market jitters. Meanwhile, oil rebounded to over $131 a barrel.

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BACK ABOVE $130

The headline: Crude Oil Jumps 1.7% To $131.03 On New Threats From Nigerian Militant Group.

Oil rose more than $2 a barrel on fears about Nigerian supplies, rebounding from a sharp drop early in the session triggered by concerns about a slowdown in world energy demand.

I think the trend in oil is higher, says Jeff Macke.

I’d get long American Airlines as a way to play crude, counsels Guy Adami.

Don’t forget about oil service stocks, natural gas and coal, reminds Pete Najarian. Specifically, I’d keep an eye on Eastman Chemical and Sasol because they gasify coal.

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MATERIALS SURGE 2%

The headline: Dow Chemical To Raise Prices For All Its Products By 20% Next Month.

Dow Chemical Co , the biggest U.S. chemical manufacturer, said on Wednesday it would hike prices for all its products by up to 20 percent next month, the latest signal that escalating energy prices were stoking inflation.

In the chemical space I like DuPont best, says Pete Najarian.

Me too, adds Guy Adami. I think it’s a buy with a stop out at $46.75.

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FINANCIALS CAN'T FIND BOTTOM

The headline: AIG Plunges To 10-Year Low After Citi Analyst Calls $20B Capital Raise Insufficient.

American International Group which last week closed a $20 billion capital raising, may need to again tap capital markets to bolster its balance sheet, according to a Citigroup Global Markets research report.

Citigroup cut the target price for AIG stock to $41 from $47, and rates the stock "hold/speculative," according to the note from analyst Joshua Shanker

If you want to play the space, I’d play the Financial Select Sector SPDR , says Karen Finerman.

Or look at Legg Mason . I’m seeing unusual options action, reveals Pete Najarian. Traders are buying the July 45-40 put spread. That suggests this stock could go lower.

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RALPH LAUREN LEADS RETAIL

The headline: Polo Ralph Lauren Shares Soar 12% On Better-Than-Expected Earnings.

Shares of Polo Ralph Lauren rose on Wednesday, after the apparel maker reported better-than-expected fourth-quarter earnings as sales jumped

There’s been some upside in retail, says Jeff Macke. But it’s a trade.

Men’s clothing is strong, adds Karen Finerman. I don’t know why that is, but I’ve noticed that trend.

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'THE COCOONING CUSTOMER'

The headline: UPS Shares Climb On Merrill Lynch Upgrade; 'Cocooning Customers' Likely To Spend More Of Their Money From Home As Economy Weakens.

As gas prices surge it seems more consumers are looking to shop from home. That trend benefits UPS whose shares jumped over 3% on Wednesday after the company received an upgrade from Merrill Lynch from “Neutral” to “Buy”.

I think Merrill is early with UPS, says Guy Adami. But it’s worth a look.

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WHALE WATCHING: CARL ICAHN

The headline: Carl Icahn Reported Holding 6.3M Shares Of Amylin Pharmaceuticals As Of March 31

Lehman Brothers upgraded Amylin Pharmaceuticals to "equal weight" from "underweight," saying billionaire investor Carl Icahn's involvement could focus attention on strategic options.

The brokerage said Carl Icahn investment stake is likely to shift focus from concerns regarding flat trends for diabetes drug Byetta, emerging competition, regulatory risks and poor earnings visibility.

I’d keep an eye on Amylin, counsels Pete Najarian. I think Icahn will make changes.

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INSIDE ALERT: FOLLOW THE INSIDERS?

The headline: Home Depot Director David Batchelder Bought 3.4M Shares Of The Retailer Last Week

Home Depot director David Batchedler bought 3,398,490 shares of common stock, according to a filing with the Securities and Exchange Commission for an average price of $26.99 apiece. (Insiders file Form 4s with the SEC to report transactions in their companies' shares.)

I like HD stock at current levels, says Guy Adami.

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WILL YAHOO SAY YES?

The headline:Yahoo Likely To Strike Deal Soon With Either Microsoft Or Google: BusinessWeek.

The drama surrounding Yahoo! may soon reach its final chapter. According to BusinessWeek the Internet search engine may be near a deal involving Microsoft, Google or both. Meanwhile Reuters is reporting that CEO Jerry Yang says Microsoft "has a lot of interest in buying the company and we are listening.”

Jerry Yang doesn’t have a choice but to play ball, says Karen Finerman.

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THE BEST TRADER IN THE BUSINESS

The headline: Southwest Airlines Aggressively Hedging Against Fuel Costs.

Southwesthedged more than 70% of its fuel needs this year at relatively low cost which helped the airline remain profitable, explains CEO Gary Kelly.

We’ve been hedging for decades and we’re prepared for difficult times, he adds. Next year we’re about 55% hedged at $51 a barrel and we’ve got a decent position started for 2010 through 2012. But no one can predict what energy prices will be. It’s an insurance program and it’s helping see us through.

And that’s just one component (of our business model), Kelly adds. We continue to have the lower-fare advantage and that’s huge. Low-fares attract more business. (Consequently) we’re able to grow when everyone else is shrinking.

Traders what do you think?

Gary Kelly is a great CEO and I think Southwestis best of breed but I just can’t recommend this stock, says Jeff Macke.

Right now airlines are trading vehicles, adds Guy Adami. Play the volatile ones not Southwest.

















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Trader disclosure: On May 28, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (INTC), (WMT), (MSFT); Adami Owns (C), (GS), (INTC), (MSFT), (AGU), (NUE), (BTU); Najarian Owns (AAPL), (BHI), (BUD), (TSO), (XLF), (HPQ), (ANR), (ENER); Najariain Owns (EXPE) Calls; Najarian Owns (BAC) Puts; Finerman Owns (GS); Finerman's Firm Owns (AAPL), (AEO), (MSFT), (RL), (SUN), (TSO), (VLO), (WLP); Finerman's Firm Owns SPX Index Puts; Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm And Finerman Own (HD); Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY), (BBT)

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