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Pros: Future of Energy at Potential Crossroads?

On Wednesday markets swooned after comments from an EU official triggered more fears about the safety of nuclear power.

Although the comments were later downplayed, the future of energy was called into question after EU Energy Commissioner Guenther Oettinger warned of "further catastrophic events" in Japan.

"The chart of uranium producer Cameco may tell the story," says Fast Money host Melissa Lee. "It's a nose-dive."

Adding to the nuclear industry's woes, China suspended approval of new nuclear projects. As many as 160 reactors had been expected to be built in China over the next few years, according to a Financial Times report.

With an every growing need for power and the promise of nuclear energy growing dim, the future of energy may be at a crossroads.

How should you position? What should you be watching?

Instant Insights with the Fast Money

Always on the look-out for unusual options action as a market ‘tell’ Pete Najarian finds a few moves rather noteworthy. In Petrohawk he’s spotted a much larger than usual volume in the March 19 calls and April 22 calls. He’s also seeing heavy buying in Chesapeake April 35 calls and April 38 calls.

Najarian takes the moves to mean fossil fuels will quickly become much more attractive as the safety of nuclear energy is called into question.

And of all the fossil fuels, he sees incredibly strong interest in coal names. "They are absolutely on fire across the board,” Najarian says. “From Arch Coal and Peabody to Massey and Alpha across the board. And KOL is exploding to the upside.

Trader Steve Cortes agrees with Najarian. He says, “recent events have been incredibly bullish for fossil fuels, particularly coal."

Najarian strongly believes that events in Japan could propel coal to become the fuel of choice to generate electricity.

And he’s not just talking Japan. Najarian also points to reports that Germany may close nuclear facilities.

Also China suspeneded approval of new nuclear projects; 124 reactors had been expected to be built in China over the next few years. “Something has to replace that.”

But not everyone shares Najarian's enthusiasm. Trader Brian Kelly just can’t get behind the coal trade. “Coal is dependent on industrial production and we’re going to see a slowdown in industrial production in Japan,” he argues. “And we may also see a slowdown in Europe and possible in the US. How is coal going to benefit?”

Meanwhile, Cortes says he’s looking to shortsolar names. “They got a very big pop, but I don’t believe solar is an alternative source of energy that’s credible for an industrial society.”

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AGAIN JAPAN DOMINATES SESSION

U.S. stocks dropped for a third day in a volatile session on Wednesday as worries about Japan's nuclear crisis escalated, and analysts saw more volatility ahead for the market.

"We are so fixated here on Japan, and this intraday volatility is without question here to stay as we are all quickly learning what nuclear power is. You can throw everything else out the window," says Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in
a Reuters interview.

How should you position?

Pete Najarian is squarely focussed on the Vix. "Now that we’ve broken above 25 and sustained at these levels, expectations are for more volatility in the days ahead," he says.

Trader Steve Cortes is closely watching moves in the yen , which are at 16 year highs against the US dollar. He thinks that kind of strength is exaggerated. "At some point the BofJ will have to ease and on a mammoth scale to trigger the kind of recovery needed," he speculates. "I’m long dollars." He also likes long Toyota as a stock that was oversold.

Patty Edwards is watching the action in the GLD. "It's got to hold its 50-day and 100-day moving averages," she says. "And if it doesn’t hold those levels, I’d look out below."

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TOLD YOU SO

U.S. housing starts posted their biggest decline in 27 years in February while building permits dropped to their lowest level on record, suggesting the beleaguered real estate sector has yet to rebound from its deepest slump in modern history.

Peter Schiff of Euro Pacific Capital and author of "How An Economy Grows And Why It Crashes" has warned the desk that housing would be the Achilles Heel in the recovery.

Check out our entire conversation with Schiff. Watch the video now!






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Trader disclosure: On Mar. 16, 2011, 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 (AAPL), (AAPL) Call Spreads. Pete Najarian Owns (BAC) Calls. Pete Najarian Owns (C). Pete Najarian Owns (F) Bonds. Pete Najarian Owns (IBM) Calls. Pete Najarian Owns (MS). Pete Najarian Owns (JPM) Call Spread. Pete Najarian Owns (TCK). Pete Najarian Owns (BTU) Calls Spread. Pete Najarian Owns (HK) Call Spread. Pete Najarian Owns (MTW) Calls. Steve Cortes Owns (EXC). Steve Cortes Owns (TM). Steve Cortes Owns (SDY), Is Short S&P. Steve Cortes Is Long U.S. Dollar vs. Australian Dollar. Steve Cortes Is Long U.S. Dollar vs. Canadian Dollar. Steve Cortes Is Long U.S. Dollar vs. Euro. Steve Cortes Is Long Oil. Steve Cortes Is Short (C). Steve Cortes Is Short (F). Steve Cortes Is Short Gold. Steve Cortes Is Short Silver. Steve Cortes Owns (SO).

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

PATTY EDWARDS
Edwards Owns (XLB) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (SPY) For Clients

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (TLT)
Accounts Managed By Kanundrum Capital Own (TSO)
Accounts Managed By Kanundrum Capital Own (VLO)
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (UUP)
Accounts Managed By Kanundrum Capital Are Long U.S. Dollar
Accounts Managed By Kanundrum Capital Are Long U.S. Bonds
Accounts Managed By Kanundrum Capital Are Long Copper
Accounts Managed By Kanundrum Capital Are Short Euro
Accounts Managed By Kanundrum Capital Are Short Yen
Accounts Managed By Kanundrum Capital Are Short Pound
Accounts Managed By Kanundrum Capital Are Short (XLF)
Accounts Managed By Kanundrum Capital Are Short (IXG)
Accounts Managed By Kanundrum Capital Are Short (XRT)
Accounts Managed By Kanundrum Capital Are Short (EWJ)
Accounts Managed By Kanundrum Capital Are Short (EWY)

ALEX GAUNA
JMP Securites Is A Market Maker In (AAPL)

Late additions:
Accounts Managed By Kanundrum Capital Are Short (IWM) Puts, Are Long (IWM) Calls
Schiff Are Long Gold, Euro, Silver
Schiff Is Short U.S. Dollar
Schiff's Clients Are Long Gold, Euro

CNBC.com with wires.

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