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Market Pros: Oil Breaking Out On March To $90

Rally skeptics, for shame. Stocks extended gains on Friday, the first day of the new month and the new quarter, despite talk that headwinds were brewing.

Resource stocks led the way higher after data in China showed a pick-up in manufacturing activity.

Perhaps most impressive was the action in oil . The price of crude rose sharply on Friday breaking out of a range. For two-thirds of the year, oil prices have vacillated between $70 and $80 per barrel.

What should you make of the move?

Instant Insights with the Fast Money traders

I think we’re looking at the start of an oil spike, says Joe Terranova. I truly believe we see oil print $90 before the end of the year. Not only are fundamentals such as China's manufacturing data bullish for oil, geo-political concerns are brewing and the potentail for supply disruption should also drive prices.

Also the dollar is getting weaker and that’s bullish for oil, says host Melissa Lee.

And, as we go into the next quarter, China intends to fill its strategic petroleum reserves, reminds Brian Kelly. That’s also bullish. For me the play is long tanker stocks such as Frontline .

Or take a look at Nordic American Tanker as well as Ormat which is a play on geothermal, adds Patty Edwards.

I'd play the space longBP , says Karen Finerman. Also in the space I like RIG .

The solar trade tends to move higher when the price of oil spikes, reminds Zach Karabell. And it tends to have higher beta. JA Solar is a name for the radar.

I agree that higher oil prices are favorable for solar stocks but I’d play it with First Solar, adds Terranova.


And elsewhere in the space, if you’re looking to play nat gas, adds Karabell, I was talking to an energy CEO who told me that he doesn’t expect the price of nat gas to ever go above $4.50 - ever.

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SEPTEMBER STARS AND ALSO RANS

Of course not to say every stock had a great day on Friday. In fact October 1st was rough for some of September's stars: Take a look at Netflix and Amazon – both were taken down a peg to start the 4th quarter after gaining more than 25% last month.

Should you buy the pull back?

Netflix and Amazon are all about momentum and the short-squeeze potential, says Karen Finerman. As a value investor I just can’t play here.

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WHAT'S IN A NAME?

Birinyi put together a list showing the stocks with the most positive impact on the S&P. Take a look:

Stocks with Most Positive Impact on S&P 500 Q3 2010
Apple
Oracle
Chevron
AT&T
Pfizer

What should you make of it?

Looking at this list I can’t help but wonder if some money managers bought these stocks as window dressing into quarter’s end, says Brian Kelly. They could all pullback over the next few days.

Birinyi also put together a list showing the stocks with the most negative impact on the S&P last quarter. Take a look:

Stocks with Most Negative Impact on S&P 500 Q3 2010
Bank of America
Medtronic
Hewlett-Packard
Wells Fargo
PNC

What should you make of it?

I think Bank of America is a premiere franchise and its trading near book value, says Karen Finerman. That doesn’t happen often. At these levels the risk reward is very compelling.

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CORN LIMIT DOWN

Soft ag stocks took a hard hit on Friday with corn sharply lower, limit down, on a supply increase. However, it’s worth noting the commodity had climbed 33% in the 3rd quarter.

What’s the trade?

Don't forget there was extremely negative sentiment in the ag space over the summer, says Joe Terranova. I think recent gains were just an unwind. If you’re looking for an ag trade I’m a buyer of Potash around $140 but play it with puts. (BHP has bid for the company at $130/share.)

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THE TABLET TRADE: RIMM UPGRADED ON THE PLAYBOOK

Investors were not impressed when Research In Motion unveiled its new Playbook tablet earlier this week. Shares dropped on the news.

But Pablo Perez-Fernandez of MKM Partners thinks the Street got it all wrong.

Find out why. Watch the video now!




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Trader disclosure: On Oct. 1, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman and Finerman’s Firm owns (BAC); Finerman and Finerman’s Firm owns (BP); Finerman’s Firm owns (DAN); Finerman’s Firm owns (HPQ); Finerman’s Firm owns (LEA); Finerman and Finerman’s Firm owns (JPM); Finerman and Finerman’s Firm owns (RIG); Finerman’s Firm owns (CVS); Finerman’s Firm owns (GYMB); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Karabell owns (AAPL), (BP), (C), (GS), (MON), (RIMM); Terranova Owns (AAPL), (APA), (ARUN), (C), (EOG), (FTO), (HES), (IBM), (JOYG), (NBR), (OIH), (ORCL), (OXY), (PEP), (POT), (RIG), (RIMM), (RSH), (SU), (UPL), (VRTS), (XBI); Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST)

For Zach Karabell
River Twice Captial own (MON)
River Twice Captial own (GS)
River Twice Captial is short (SPX)
River Twice Captial is short (QQQQ)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Patty Edwards
Edwards owns (HPQ) for clients
Edwards owns (AAPL) for clients
Edwards owns (ORCL) for clients
Edwards owns (JPM) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (FCX) for clients
Edwards owns (PGM) for clients

For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (JPM)
Accounts managed by Kanundrum Capital own (PCL)
Accounts managed by Kanundrum Capital own (LPX)
Accounts managed by Kanundrum Capital owns U.S. Dollars
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (BCS)
Accounts managed by Kanundrum Capital are short (HYG)
Accounts managed by Kanundrum Capital are short (SLF)
Accounts managed by Kanundrum Capital are short the Mexican Peso
Accounts managed by Kanundrum Capital are short the U.K. Pound

For Steve Grasso
Stuart Frankel & Co and it’s partners own (AMGN)
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)

Pablo Perez-Fernandez
***No Disclosures***

Ed Mills
***No Disclosures***



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