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Dennis Gartman: Oil Probably Won’t Go Any Higher

Monday, 7 Mar 2011 | 6:23 PM ET

The bull market turns 2 years old this week and nervous investors wonder if it can possibly get a whole heck of a lot older than it is now.

Oil remains the biggest obstacle with investors punishing both the S&P and Dow on Monday, amid worried that unless crude declines quickly and sharply, it could derail the recovery.

Also, technology stocks sold off as investors feared higher prices at the pump could present serious headwinds for the sector.

"It's a concern with WTI above $105 that consumers may have a little less money in their pockets and not buy a new iPad or mobile device," explains Fast Money host Melissa Lee. Rather they'll stick with what they've got.

In fact, the Nasdaq is now teetering on a key technical support level just above its 50-day moving average. If it breaches that level, it could signal more declines ahead.

Meanwhile the Vix spiked again, suggesting fear has returned to the market.

How should you position now? What should you be watching?

Instant Insights with the Fast Money traders

If you're among those investors who feel the market's fate is all about the price of oil, you might not like what trader Joe Terranova has to say. He thinks the path of least resistance for oil is higher. He’s focused on the Day of Rage planned in Saudi Arabia for Friday. “With that ahead of us” Terranova doesn’t see how prices can recede significantly.

Analyze This
A look at the long term gold trend, crude and cotton, with Dennis Gartman, The Gartman Letter.

Esteemed commodities investor Dennis Gartman however, is on the other side of that trade. Unless something truly untoward happens in Saudi Arabia he suspects $115 in Brent and $105 in WTI are very 'sporty' numbers. “I have a hard time thinking oil prices go any higher than where they are right now.”

Karen Finerman is somewhat on the fence. She reminds the desk that “nothing fundamental really happened Monday, nothing new.” She hesitates to change her portfolio based on the spike in oil. “I wouldn’t trade my portfolio around these events,” she says.

Tim Seymour questions at what levels crude presents very serious challenges for the economy and as a result the market. Recent action suggests we may be close. “We went all the way back to Wednesday’s lows and sold a very hard rally. That’s not a good sign,” he says.

However, that’s not to say Seymour is bearish. He’s not. “I would not hit the panic button in any way,” he adds.

Guy Adami is much more skeptical of the market. He points to the action in Freeport and Apple, stocks that he calls bellwethers for the move higher. “Lately they’ve trading poorly," he says.

Word on the Street
The Fast Money traders take a look at today's top business stories.

With Freeport often traded as a proxy for copper, Dennis Gartman shares Adami’s concern that metals are telegraphing an important message. “All of the industrial metals, copper, aluminum, zinc and tin were weak,” says Gartman. “That’s probably not a good sign. It’s probably a sign that stock prices are a little sporty on the upside.”

Extrapolating that to the S&P specifically Guy Adami reminds the desk that “1325 has been resistance a couple times and 1300 has continued to hold,” but if we trade down to 1300 I don’t think it holds,” he says.

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VALUE TRADE OR TRAP

As we mentioned above, tech led the S&P lower on Monday with some of the hardest hit names landing on the Fast Money trader radar.

Were any oversold?

Akamai : I don’t own it yet, but I think it’s getting interesting, says Karen Finerman.

Cisco : Around $18 I think it’s a value trap, says Guy Adami.

Salesfore.com : I’m a cautious buyer on the pullback, counsels Brian Kelly.

F5 : I like the cloud trade but I don’t like this stock, says Joe Terranova.






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Trader disclosure: On March 7, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL); Seymour owns (BAC); Seymour owns (F); Seymour owns (GE); Seymour's firm is short (FCX); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (MDY); Finerman's Firm is short (XRT); Finerman's Firm is short (IJR); Finerman's Firm Is Long S&P Puts; Finerman's Firm Is Long Russell 2000 Puts; Finerman's Firm And Finerman Own (AAPL); Finerman's Firm Owns (BAC) Leap, Finerman Owns (BAC); Finerman's Firm Owns (BBY); Finerman's Firm And Finerman Own (BP); Finerman owns (C); Finerman's firm owns (FDO); Finerman owns (GM) leaps; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (HPQ); Finerman's Firm Owns (IBM); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM); Finerman's firm owns (M); Finerman's Firm And Finerman Own (MSFT); Finerman's Firm Owns (WMT); Terranova owns (VRTS); Terranova owns (C); Terranova owns (UPL); Terranova owns (ABT); Terranova owns (MS); Terranova owns (PBR); Terranova owns (BAX); Terranova owns (TEVA); Terranova owns (CVI); Terranova owns (RSX); Terranova owns (SU); Terranova owns (CNQ)

For Joe Terranova
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (DOM)

For Brian Kelly
Accounts Managed By Kanundrum Capital Are Long Oil
Accounts Managed By Kanundrum Capital Are Long Gold
Accounts Managed By Kanundrum Capital Are Long Silver
Accounts Managed By Kanundrum Capital Are Long U.S. Bonds
Accounts Managed By Kanundrum Capital Are Long The Euro
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (IAU)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (SLV) calls
Accounts Managed By Kanundrum Capital Own (GLD) calls
Accounts Managed By Kanundrum Capital Own (EBAY)
Accounts Managed By Kanundrum Capital Own (SPY) puts
Accounts Managed By Kanundrum Capital Are Short The U.S. Dollar
Accounts Managed By Kanundrum Capital Are Short S&P Futures
Accounts Managed By Kanundrum Capital Are Short (XRT)
Accounts Managed By Kanundrum Capital Are Short (XLF)
Accounts Managed By Kanundrum Capital Are Short (IXG)
Accounts Managed By Kanundrum Capital Are Short The Yen

For Dennis Gartman
Funds Managed By Dennis Gartman Are Long Gold
No disclosures on cotton or oil

For Aaron Rakers
Stifel, Nicolaus & Company, Inc. is a market maker in (STX)
(STX) is/was a client of Stifel, Nicolaus & Company, Inc. or an affiliate within the past 12 months
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (STX). in the next 3 months
(STX) is/was provided with non-investment banking, securities related services by Stifel, Nicolaus & Company, Inc. or an affiliate within the past 12 months.
Stifel, Nicolaus & Company, Inc. is a market maker in (WDC)
(WDC) is/was a client of Stifel, Nicolaus & Company, Inc. or an affiliate within the past 12 months
Stifel, Nicolaus & Company, Inc. expects to receive or intends to seek compensation for investment banking services from (WDC) in the next 3 months.

For Mark Mahaney
Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of (YHOO), (NFLX), (AKAM)
Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of (WBMD), (ACOM).
Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12 months from (WBMD), (ACOM), (PCLN)
Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from (GOOG), (YHOO), (AMZN), (WBMD) in the past 12 months.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as investment banking client(s): (WBMD), (ACOM), (PCLN)
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities-related: (GOOG), (YHOO), (AMZN), (WBMD)
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non-securities-related: (GOOG), (YHOO), (AMZN), (WBMD).
Citigroup is a market maker in the publicly traded equity securities of (NFLX), (AKAM), (GOOG), (YHOO), (AMZN), (WBMD)
Citigroup Global Markets Inc. and/or its affiliates has a significant financial interest in relation to (GOOG), (YHOO)
Citigroup Global Markets Inc. or its affiliates beneficially owns 2% or more of any class of common equity securities of (YHOO)

For Mike Khouw
Cantor Fitzgerald & Co. is a market maker in (SPY)
Cantor Fitzgerald & Co. is a market maker in (IWM)

For Todd Gordon
Gordon has no disclosures

For Bill O'donnell
O'Donnell has no disclosures

For Tim Seymour Fast Fire
Seymour had no disclosures in (JASO) or (TSL) on 2/17/2011

For David Wong, Halftime Play Of The Day
Wells Fargo Securities, LLC Is A Market Maker In (QCOM)
(QCOM) is/was a non-investment banking client of Wells Fargo Securities, LLC in last 12 months
Wells Fargo Securities, LLC received non-investment banking compensation from (QCOM) in last 12 months
Wells Fargo Securities, LLC Or Affiliates May Have A Significant Financial Interst In (QCOM)

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Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC



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