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Pros: The Risk-Off Trade Is On

Stocks were slammed on weak China data and Spanish cuts on Thursday. How should you position yourself now?

It's becoming a risk-off kind of market, the "Fast Money" traders said. There was a lot of names in the red, but what works is defensive names. Options trader Pete Najarian said people are feeling nervous, so they're looking for valuation and dividend-paying stocks, like PepsiCo and McDonald's.

The VIX traded at highs early on Thursday, pulled back and settled at around 22, which Najarian took to be a good sign. That surprised Karen Finerman of Metropolitan Capital Advisors, who thought there would be more panic in the market. Najarian said people were pulling out of beta names, like copper.

Weak China data showed copper imports have slowed. Joe Terranova, chief market strategist at Virtus Investment Partners, noted this is a theme he's been talking about for a while — copper has underperformed relative to everything else. It shows you China is slowing a bit, but he's not sure if that's a sustainable theme going forward.

If you think China is OK and this is a temporary pullback, Guy Adami of Drakon Capital said the market is giving you a nice entry point to names like Walter Energy .

Najarian agreed. Intrepid Potash is another name, which has sold off and so people are buying time and taking positions, he said. They're not calling a bottom, though.

Going forward, Najarian will watch the 1,300 level on the S&P.

Adami said the 1,300 level is critical, especially in trading on Friday. If the market bounces, he thinks it will take out 1,325 and head toward 1,350. Should it sell-off, he thinks 1,275 is easily attainable. He doesn't, however, thinks the market will be flat on Friday.


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Trader disclosure: On Mar. 10, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova Owns (VRTS), (C), (GS), (PNC), (USB), (JPM), (UPL), (ABT), (MS), (PBR), (BAX), (TEVA), (CVI), (RSX), (SU) and (CNQ). Guy Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE) and (BTU). Pete Najarian Owns (AAPL) and (TCK).

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JOE TERRANOVA
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
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Virtus Investment Partners Owns More Than 1% Of (DOM)

KAREN FINERMAN
Finerman's Firm Is Short (IWM)
Finerman's Firm Is Short (MDY)
Finerman's Firm Is Short (SPY)
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ZACHARY KARABELL
Karabell And River Twice Capital Own (AAPL)
Karabell And River Twice Capital Own (CSCO)
Karabell And River Twice Capital Own (BRCM)
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River Twice Capital Is Short (SPY)
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ANTHONY SCARAMUCCI
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SOT/TIM SEYMOUR 2/15/11
***NO DISCLOSURES ON GMCR

SOT/PETE NAJARIAN 1/3/11
***NO DISCLOSURES ON HPQ

SOT/ANTHONY SCARAMUCCI 3/3/11
***NO ADDITIONAL DISCLOSURE NECESSARY

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