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Playing The Hand You've Been Dealt

If you’re an investor you’re probably struggling with the hand you’ve been dealt. And from our vantage point your cards aren’t so great.

After all, the American consumer is retrenching, Greece is careening toward a bailout and stocks look to be back in correction mode.

But even in these tough times you can still find opportunity. You just have to know where to look!

Strategy Session with the Fast Money Traders

Stocks suffered their biggest one-day decline in nearly three weeks on Tuesday after consumer confidence in February slumped to a 10-month low as the short-term outlook on jobs worsened.

What must you know before you trade?

One thread does not a tapestry make and one piece of data does not an economy make, says Guy Adami. However that consumer confidence number was not good.

I never put too much stock in consumer confidence however the magnitude of the surprise is worrisome, says Karen Finerman. In retail, I think we may see a kind of barbell trade, with high end stores and low end stores doing well and those in the middle having trouble. Personally, I’m longSaks.

The confidence numbers say to me it is not time to jump on the discretionary stocks, muses Tim Seymour.

Looking at the Dow and broad market, I don’t think this is just profit taking, speculates Joe Terranova. I think we’re seeing a change in momentum. This is a good time to take profits.

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MARKET BUZZKILL: EURO DIVES

The traders are keeping a close eye on the euro after Fitch downgraded the ratings of Greece's four largest banks on expectations fiscal tightening would weigh on the economy and loan demand, hurting profits.

Specifically, Fitch downgraded National Bank, Alpha Bank, , EFG Eurobank, and Piraeus Bank by one notch to BBB from BBB-plus.

What must you know?

The EU can’t raise rates because economies in Europe are terrible, says Dennis Gartman, author of The Gartman Letter. That means the euro probably has a lot more downside.

I dare say the cloth of the European Union is being torn, he adds. It could take months if not years to unwind.

I think the play is to own gold and be short euros, short sterling and/or short Swiss francs. Or you might want to short sugar because it’s failed to make new highs, he adds.

I’d be long the currencies that are growing but are undervalued, counters Tim Seymour. Look at Brazil.

I'm concered about the UK, reveals Joe Terranova. The pound has been a clear under-performer this year. I'd keep an eye on it.

I consider the pound to be the 'risk' currency, adds Seymour. When I see the pound rally I start to get longer other names - as an indication investors are taking on risk. It's a great indicator of when people put risk on or take it off.

*In case you’re wondering the problems in Europe will be front and center in Wednesday’s Gartman Letter.

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OUTSIDE THE STOCKS: TREASURIES

U.S. Treasury debt prices shot higher on Tuesday as a plunge in U.S. consumer confidence in February sent traders scrambling to buy lower-risk government debt.

The flight to safety continued through the day, and Treasuries extended gains after an auction of $44 billion of two-year notes was met with solid demand and alleviated some fears of a waning appetite for enormous doses of U.S. debt.

What’s the trade?

If we see a resolution to the troubles in Europe it wouldn’t surprise me to see the action reverse, muses Karen Finerman.

Considering the Fed has been a big buyer of Treasuries, it wouldn't surprise me to find out we’re creating a bubble, adds Joe Terranova.

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TOPPING THE TAPE: FORD

Shares of Ford traded higher on Tuesday after new reports suggested Toyota may be facing a criminal probe into the handling of its massive safety recalls.

Also, Gimme Credit, an independent research service that rates corporate bonds, downgraded Toyota in the wake of the congressional hearings.

“It is our expectation that Toyota will get pummeled by legislators and that the outcome of these hearings will exacerbate an already worrisome record of weak quality control over several years as the company drove for global market share growth,” they said.

What’s the trade?

I think this will be a major boom for Ford, says Tim Seymour. The stock isn’t as expensive as you might think.

I wouldn’t chase Ford, counters Guy Adami. I think if it pulls back to $10.85 I’m a buyer.

I'm a buyer of Ford and short of Toyota, reveals Dennis Gartman. But if Ford takes out yesterday's lows, I'm gone.

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APPLE LEADS TECH STOCKS LOWER

America's favorite tech stock, Apple, led the sector lower on Tuesday. Investors may fear that the latest consumer confidence data means shoppers will be less likely to buy Apple’s somewhat expensive gadgets.

What’s the trade?

I expect Apple will test $190, says Guy Adami.

I’m cutting back my position in technology broadly, adds Joe Terranova. It feels like the sector wants to move lower.

In the space, I like IBM, reveals Jared Levy of Peak6. From a valuation standpoint it’s cheap. And I think Corproate America spends on technology to generate efficiencies rather than hire new workers.



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Trader disclosure: On February 23, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kaminsky Owns (EXPD), (EPV); Kaminsky Owns (LULU) Puts; Terranova Owns (IBM), (QCOM), (GOOG), (EMC), (AAPL), (DELL), (MSFT); Najarian Owns (HK) Call Spread; Najarian Owns (INTC) Calls; Najarian Owns (MS); Najarian Owns (RSH) Call Spread; Adami Owns (INTC), (GS), (AGU), (MSFT), (NUE), (C), (BTU), (AGU); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (UNG),, (USO); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS), (GOOG), (JPM), (WFC); Finerman's Firm Owns (IBM), (TGT), (WMT)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For David Barse
Third Avenue Management Owns (WY)
Third Avenue Management Owns (ECA)
Third Avenue Management Owns (KEY)
Third Avenue Management Owns (BAM)

For Jared Levy
Peak6 Investments Owns And Has An Options Position In (AAPL)
Peak6 Investments Owns And Has An Options Position In (CERN)
Peak6 Investments Owns And Has An Options Position In (MDRX)
Peak6 Investments Is Short And Has An Options Position In (QSII)
Peak6 Investments Owns And Has An Options Position In (IBM)
Peak6 Investments Is Short And Has An Options Position In (ACN)
Peak6 Investments Is Short And Has An Options Position In (CRM)
Jared Levy Recommends Being Short (AAPL) Call Options In His Options Trade Alerts Account

For Dennis Gartman
Funds Managed By Dennis Gartman Are Short Euro
Funds Managed By Dennis Gartman Are Short British Pound
Funds Managed By Dennis Gartman Are Long Canadian Dollar
Funds Managed By Dennis Gartman Are Long Australian Dollar
Funds Managed By Dennis Gartman Own (PGH)
Funds Managed By Dennis Gartman Own (GLD)


CNBC.com with wires

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F
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IBM
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7203.T
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SPDR TEC SEL
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SPDR CD SEL
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AAPL
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