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Halftime: Materials Heading for Major Meltdown?

Are materials headed for a major meltdown?

According to Jeff DeGraaf, institutional investors top ranked technical analyst for the past six years, a worrisome signal may be emerging.

DeGraaf, recently left ISI Group to start his own firm, Renaissance Macro Research and spoke with Fast Money first since starting his own firm.

In a live interview on CNBC's Halftime Report, DeGraaf explains that he's concerned by the price action in copper - called doctor copper - because it often serves as a bellwether for moves in the sector broadly, and something the entire market.

"Weakness in copper is a question mark," is a big question mark.

Over the last few months, many investors have piled into copper, as a bet that demand from developing countries would keep sending prices skyward.

But in recent days investors have punished copper and other industrial metals as China has moved to curb growth in their efforts to curtail inflation. And in the wake of the earthquake, concerns have surfaced about decreased auto production in Japan; that's dragged down copper prices even more.

Does weakness in copper signal broader issues for the materials sector?

For a 'tell' DeGraaf tells the Fast traders to watch the action in Freeport McMoRan. "It tends to lead copper between 2 and 6 weeks," he says. And recently "FCX has been weaker than copper." he says.

If FCX trades at 65-day low, DeGraaf takes it as a signal of a breakdown.

Although that may sound like a short signal, DeGraaf cautions not to run out and go short, materials broadly. Instead, DeGraaf says to interpret the move as a sign to make moves cautiously in the space.

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CALL TO THE FLOOR: FUTURE OF NUCLEAR ENERGY

As nuclear reactors continue to deteriorate in the wake of Japan's earthquake let's get to an update on the state of the country's nuclear emergency and the future of Japan's energy reliance.

Hear from Thomas Drolet, CEO of Drolet & Associates and former CEO of Ontario Hydro International.

Don’t miss a word. Watch the video now!



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Trader disclosure: On March 9, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Weiss Owns (SHAW); Steve Weiss Owns (FWLT); Steve Weiss Owns (MSFT); Steve Weiss Owns (MEE); Steve Weiss Owns (CSCO); Steve Weiss Owns (QCOM); Steve Weiss Is Short (ANF); Guy Adami Owns (AGU); Guy Adami Owns (C); Guy Adami Owns (GS); Guy Adami Owns (INTC); Guy Adami Owns (MSFT); Guy Adami Owns (NUE); Guy Adami Owns (BTU); Joe Terranova Owns (VRTS); Joe Terranova Owns (C); Joe Terranova Owns (GS); Joe Terranova Owns (PNC); Joe Terranova Owns (USB); Joe Terranova Owns (JPM); Joe Terranova Owns (UPL); Joe Terranova Owns (ABT); Joe Terranova Owns (CVI); Joe Terranova Owns (RSX); Joe Terranova Owns (CNQ); Joe Terranova Owns (MS); Joe Terranova Owns (PBR); Joe Terranova Owns (BAX); Joe Terranova Owns (TEVA); Joe Terranova Owns (BTU); Joe Terranova Owns (CNX); Joe Terranova Owns (SU); Pete Najarian Owns (AAPL); Pete Najarian Owns (GE); Pete Najarian Owns (NTAP); Pete Najarian Owns (GE); Pete Najarian Owns (TCK)

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