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Pros: Be Careful of Market as Oil Nears $110

Both the Dow and S&P closed modestly lowered on Thursday as investors booked profits and closed their books on the last day of a quarter.

From the Japan quake and unrest in the Mideast to Europe’s financial woes and more, this hasn’t been a quarter for the faint of heart.

And the very first day of the new quarter on Friday could be just as stomach churning depending on what the market gets from the jobs report.

"Claims are going in the right direction, and that gives us hope that we'll see a good employment number Friday," says Jerry Harris, president of asset management at Sterne Agee in a Reuters interview.

However the Fast Money traders are closely watching another catalyst that could dominate trade immediately after the jobs number.

And that catalyst is oil . The price of crude rose on Thursday and that’s generating a lot of concern on the Fast Money desk. What must you know? What’s the trade?

Instant Insights with the Fast Money traders

Trader Steve Cortes is cautious of the rally. He reminds the desk that energy was the top performing sector for the quarter and that could be a problem. “The S&P is doing well on a narrow scope. Technology is lagging and financials are doing poorly. The S&P is relying on energy (for gains) and I think that’s a dangerous premise. I’m not at all constructive on the S&P,” he says.

OptionMonster Jon Najarian isn’t quite as skeptical but he does shares at least some of the concern. He thinks if US Crude climbs to $110 the bull rally will be in trouble. (Should that happen) “I expect a whole bunch of stocks will suffer and I wouldn’t want to be near the market at that point,” he says.

According to trader Joe Terranova $110 or higher could well be in the cards.

He explains that oil is nearing a key technical level - $106.95. “It’s the highest we’ve been for the past 30 months,” Terranova says. If crude oil breaks above that level, Terranova thinks it could break out and move sharply higher. And with upcoming elections in Nigeria providing more geo-political uncertainty, he thinks a breakout is entirely possible. “In 2007, those were some of the most corrupt and violent elections experienced at any time,” he says.

But that doesn’t mean there isn’t a trade. Terranova says to remain long and overweight energy equities. Najarian has Hess on his radar. Even the contrarian Steve Cortes agrees. “I expect oil and oil stocks are headed higher due to geo-political risk.”

Trader Steve Grasso also sees the potential for further upside, but says “for me, I’d trim positions if you have gains. The sector is extremely volatile and can come in very quickly.” He also thinks market pros may move money out of energy and into retail. Although that may sound counter-intuitive, he reminds that Easter is very late this year and that could generate a rotation.

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GRAIN STOCKS RED HOT

Grain stocks turned red hot on Thursday despite new data that showed corn plantings near their all time highs.

According to the Agriculture Department, farmers intend to plant 92.2 million acres of corn this spring, a 5 percent increase over last year. That would make it the second-biggest corn crop since 1944, after a record-setting planting in 2007.

Although higher corn plantings should be bearish, Rich Ilcsyzn, Lind-Waldock senior market strategist, says the market is still more focussed on corn inventories and took the latest plantings as a sign that farmers are too.

The government said earlier this year that corn reserves were at their lowest level in 15 years. "Looking at 2010 demand and supply on hand, we’re cutting it close," Ilcsyzn says. As a result Ilcsyzn is forecasting a bull run in grains for the rest of the year.

If you agree with Ilcsyzn's thesis, Steve Grasso suggests playing it long Deere.

Joe Terranova adds that ag bulls could also play it long CF Industries and Agrium. However he adds "I don’t think corn prices sustain."

Steve Cortes seems to share Joe Terranova's outlook. "I’m short Mosaic and short DBA ," he says.



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Trader disclosure: On March 31, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Grasso Owns (AMD); Grasso Owns (ASTM); Grasso Owns (BAC); Grasso Owns (BAC); Grasso Owns (C); Grasso Owns (CSCO); Grasso Owns (D); Grasso Owns (JPM); Grasso Owns (LIT); Grasso Owns (LPX); Grasso Owns (MHY) Grasso Owns (MU); Grasso Owns (NDAQ); Grasso Owns (PFE); Grasso Owns (PRST); Cortes Owns (SDY); Cortes Owns (EXC); Cortes Owns (SO); Cortes Owns (RIMM); Cortes Owns U.S. Dollar vs. Euro; Cortes Owns U.S. Dollar vs. British Pound; Cortes is Short (F); Cortes is Short (BAC); Cortes is Short (DBA); Cortes is Short (MOS); Jon Najarian owns (HES), Is Short (HES) Calls; Jon Najarian owns (RSH), Is Short (RSH) Calls; Jon Najarian owns (AKAM), Is Short (AKAM) Calls; Jon Najarian owns (AA), Is Short (AA) Calls; Jon Najarian owns (CBOE), Is Short (CBOE) Calls; Jon Najarian owns (CME), Is Short (CME) Calls; Jon Najarian owns (ITW), Is Short (ITW) Calls; Jon Najarian owns (NYX), Is Short (NYX) Calls; Jon Najarian owns (NTAP), Is Short (NTAP) Calls; Jon Najarian owns (DANG), Is Short (DANG) Calls; Jon Najarian owns (GNW), Is Short (GNW) Calls; Jon Najarian owns (HK), Is Short (HK) Calls; Jon Najarian owns (NTRI), Is Short (NTRI) Calls; Jon Najarian owns (ONN), Is Short (ONN) Calls; Jon Najarian owns (PCX), Is Short (PCX) Calls; Jon Najarian owns (TER), Is Short (TER) Calls; Terranova owns (CNQ); Terranova owns (RSX); Terranova owns (CVI); Terranova owns (DIS); Terranova owns (AKAM); Terranova owns (JNPR); Terranova owns (XOM); Terranova owns (IBM); Terranova owns (TEVA); Terranova owns (BAX); Terranova owns (PBR); Terranova owns (MS); Terranova owns (UPL); Terranova owns ( C); Terranova owns (JPM); Terranova owns (VRTS); Terranova owns (GS); Terranova is long (AAPL) puts; Terranova is long (AKAM) calls

For Steve Grasso
Stuart Frankel & Co and it's partners own (CUBA)
Stuart Frankel & Co and it's partners own (CSCO)
Stuart Frankel & Co and it's partners own (GERN)
Stuart Frankel & Co and it's partners own (HPQ)
Stuart Frankel & Co and it's partners own (HSPO)
Stuart Frankel & Co and it's partners own (MSFT)
Stuart Frankel & Co and it's partners own (NYX)
Stuart Frankel & Co and it's partners own (PFE)
Stuart Frankel & Co and it's partners own (PRST)
Stuart Frankel & Co and it's partners own (SDS)
Stuart Frankel & Co and it's partners own (XRX)
Stuart Frankel & Co and it's partners Are Short (QQQQ)
Stuart Frankel & Co and it's partners Are Short (AAPL)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
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 Scott Devitt
Morgan Stanley Owned 1% Or More Of (AMZN) As Of Feb. 28, 2011
Morgan Stanley Has Recieved Investment Banking Compensation From (AMZN) In Last 12 Months
Morgan Stanley Expects To Recieve/Seek Investment Banking Compensation From (AMZN) In Next 3 Months
Morgan Stanley Has Recieved Non-Investment Banking Compensation From (AMZN) In Last 12 Months
Morgan Stanley Has In Last 12 Months Or Is Providing Investment Banking Services To Or Has An Investment Banking Client Relationship With (AMZN)
Morgan Stanley Has In Last 12 Months Or Is Providing Non-Investment Banking Securities-Related Services To Or Has An Client Relationship With (AMZN)
Morgan Stanley & Co. Is A Market Maker In (AMZN)
Morgan Stanely Is Acting As Financial Advisor To (AMZN) With Respect To Its Proposed Acquisition Of Quidsi, Inc., (AMZN) Has Agreed To Pay Fees To
Morgan Stanley For Its Financial Advice
Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of Best Buy Co. Inc.
Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Barnes & Noble, Best Buy Co. Inc.
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Barnes & Noble, Best Buy Co. Inc.
Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from Barnes & Noble.
Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: Barnes & Noble, Best Buy Co. Inc.
Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: Barnes & Noble.
Morgan Stanley & Co. Incorporated makes a market in the securities of Barnes & Noble, Best Buy Co. Inc.

For Rich Ilczyszyn
**No disclosures

For Whitney Tilson SOT
Funds Managed By Whitney Tilson Owned (BRK.A) And (BRK.B) On 3/30/11

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



CNBC.com with wires.

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