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Halftime: String of Catalysts To Move Energy Stocks?

While many investors may be turning over the latest jobs reports, the Fast Money desk is also keeping an eye on another developing story that could move markets in the days ahead.

An explosion and fire at a site run by Canadian Natural Resources has injured four workers and forced management to halt production at its 110,000-barrel-a-day oil sands project in northern Alberta. It’s unclear when production will resume.

Also Goldman Sachs moved energy stocks, after analyst Daniel Boyd upgraded Baker Hughes and Diamond Offshore –not because of the fire – but because they’ve lagged the space and thinks they may be about to play catch-up.

”It’s also worth noting that one day earlier Oppenheimer upgraded Exxon Mobil to “Outperform” from from “Perform” to with a $90 price target,” adds Fast Money host Melissa Lee. They say “it’s underperformed the S&P 500 for about 2 years; the first time that’s happened in about a decade.”

Are we looking at a string of catalysts that could drive energy stocks higher? How should you play energy now?

Instant Insights with the Fast Money traders

Joe Terranova thinks these developments underscore his thesis that investors should and will put money to work in energy. “The supply disruption in Canada takes about 110,000 barrels per day off the market,” he reminds.

That may pale in comparison to the output from Saudi Arabia which was 8.2 million barrels per day in 2009, but it's significant as the recovery takes hold and demand for oil increases. That demand theme surfaces again in the Goldman note. “The Goldman upgrade of Diamond Offshore was a two notch upgrade,” Terranova emphasizes. “Up to a ‘Conviction Buy'. I’m too am a buyer of oil services names on dips.”

Pete Najarian agrees and suggests looking at a few names. He likes Weatherford , Diamond OffShore and Baker Hughes. But, ” if you don’t want to pick names, look at the OIH,” he adds. The ETF gives investors a basket.

Steve Grasso is skeptical of the Goldman note simply because he doesn’t agree with the thesis of buying laggards. “I’m never a fan of buying stocks because they’re underperformers,” he tells the desk. "There's a reason why they're underperforming."

Patty Edwards feels a little differently. “I’m a believer of buying underperformers if there’s a catalyst,” she says. “But if you can’t find a catalyst play the winners.”

Grasso adds that if you’re looking for a trade remember that 70% of all stocks trade with the S&P. “What I think is much more important is the key level of 1257. If we break that level we’re all in trouble.”

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BUZZKILL: BANKS

US Bancorp and Wells Fargo led the financials lower Friday after a Massachusetts Supreme Court ruled against the banks in a foreclosure case.

According to published reports, the court said two foreclosures were invalid because the banks didn't prove they owned the mortgages.

Investors now worry that the decision will guide lower courts to make similar rulings.

What’s the trade?

In the past headwinds have been buying opportunities for banks, says Patty Edwards, but I wouldn’t get involved. There are better places to put money to work.

Largely, I think the problems that have plagued the financials are passed, counters Joe Terranova. Banks are well capitalized even if they’re facing some headwinds.






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Trader disclosure: On January 7th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian owns (BBY) calls; Pete Najarian owns (LVS) calls; Pete Najarian owns (MCD) call spread; Pete Najarian owns (F) bonds; Pete Najarian owns (AXP); Pete Najarian owns (V) call spreads; Pete Najarian owns (HPQ) call spreads; Pete Najarian owns (YHOO); Pete Najarian owns (MSFT) call spreads; Pete Najarian owns (RIMM) call spreads; Pete Najarian owns (MS); Pete Najarian owns (BAC) call spreads; Pete Najarian owns (C); Pete Najarian owns (WLT) call spreads; Pete Najarian owns (CNI); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (BWC); Grasso owns (C); Grasso owns (CSCO); Grasso owns (JPM); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MOT); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST); Grasso owns (S); Grasso owns (X); Terranova owns (GM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (PEP); Terranova owns (OXY); Terranova owns (GS); Terranova owns (LTD); Terranova owns (GLD) puts; Terranova owns (SLV) puts; Terranova owns (FCX) puts

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For Steve Grasso
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