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ECB Will Have to Take Back the Rate Hike

If you’re long the market and you don’t already have stomach problems, you probably will soon. By the close stocks plunged more than 300 Dow-handles as investors not only took risk off the table – they swiped the table clean.

Again the fears of contagion overseas sent investors running for the exits largely due to speculation that a Greek default was imminent.

”Greece had a failed Treasury bill auction,” explains trader Brian Kelly. “Greece has about $9 billion in short term debt that they needed to roll over – and they were only able to roll over about half of what they needed to.”

The markets took developments as a sign that it was only a matter of time before Greece faced the inevitable.

”This is going to influence how the market trades well into next week,” explains Pete Najarian. Of course that begs the question – how should you position amid all the mess?

Trader Steve Cortes suggests pressing your short position in the euro even though it's already moved sharply lower against the dollar. To confirm his thesis he’s looking at the comparative performance of equities in the US vs. Germany. “Normally the US and Germany trade in tandem – but they’re diverging with Germany falling off a cliff,” he explains.

”The divergence suggests to me the ECB will be forced to take back its very misbegotten rate increase,” he says – a bearish development for the euro.

Pete Najarian suggests being even more aggressive. He’s playing it long the the euro ETF . “I think it still has plenty of upside from here,” he says. (In other words he expects the euro to go much lower.)

If you’re looking for other ideas, trader Brian Kelly suggests long the TLT . And he adds, “maybe buy some SDS – and just short this market.”

However, Kelly also says this may be a good time to just be in cash. That’s largely because how events play out is anybody’s guess.

”Nobody wants to be long anything right now,” says Camilla Sutton, Chief Currency Strategist, Scotia Capital. “There’s just too much uncertainty.”

In fact, uncertainty or fear of the unknown rippled across Europe-based banks such as Credit Suisse and Deutsche Bank sending them both sharply lower.

In the bank sector, Pete Najarian was most focused on Barclays, which hit new 2-year lows during Friday’s session. “I’m seeing a lot of put buying in Barclays the 6 and 7 puts.”

That suggests options investors are either betting on further downside or hedging long positions against the potential of more downside.

If you’re looking for an options play and you’re holding a long portfolio Jon Najarian says, “I would look at a put spread in the SPY – I would buy a put that strikes pretty close to where the market is right now and sell a put underneath that and I’d sell some upside calls against it to offset the premiums I’m putting out.”

And if all this is too complicated, Pete Najarian suggests looking at Europe-based companies that may now be oversold. “Maybe the play is simply long Siemens ,” he says.

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Trader disclosure: On Sep 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; Najarian is long Apple (AAPL); Najarian is long Citigroup (C); Najarian is long Hewlett Packard (HPQ); Najarian is long Morgan Stanley (MS); Najarian is long Marvell Technology (MRVL); Najarian is long ProShares UltraShort Euro (EUO); Najarian is long Microsoft (MSFT); Najarian is long EnCana Corporation (ECA); Najarian is long Pfizer (PFE); Najarian is long Southern Copper Corporation (SCCO); Najarian is long calls McDonalds (MCD); Najarian is long calls (CLF); Najarian has call spreads in (ANF); Najarian has call spreads in (AAPL); Najarian has call spreads in (HBI); Najarian has call spreads in (TZOO); Najarian has puts in (EEM); Najarian is outright long Star Scientific (CIGX); Edwards is long Select SPDR Tech (XLK); Edwards is long Triple short S&P (RSW); Edwards held FXC (CAD dollar) until 10 minutes ago; Cortes is long (GLD); Cortes is long Treasuries; Cortes is long Southern Company (SO); Cortes is short Euro; Cortes is short Aussie; Cortes is short Crude oil

Patty Edwards
Trutina Capital is long Apple (AAPL)
Trutina Capital is long Amazon (AMZN)
Trutina Capital is long Citigroup (C)
Trutina Capital is long Google (GOOG)
Trutina Capital is long McDonalds (MCD)
Trutina Capital is long Oracle (ORCL)
Trutina Capital is long Qualcom (QCOM)
Trutina Capital is long SPDR Gold Trust (GLD)
Trutina Capital is long Double short S&P SDS

For Brian Kelly
Accounts managed by Brian Kelly Capital are long (MON)
Accounts managed by Brian Kelly Capital are long (MCP)
Accounts managed by Brian Kelly Capital are long (TLT)
Accounts managed by Brian Kelly Capital are long (JJG)
Accounts managed by Brian Kelly Capital are short (FXE)
Accounts managed by Brian Kelly Capital are short (FXA)
Accounts managed by Brian Kelly Capital are short (SLV)
Accounts managed by Brian Kelly Capital are short (JJC)
Accounts managed by Brian Kelly Capital are short (FXE)
Accounts managed by Brian Kelly Capital are short (EWG)
Accounts managed by Brian Kelly Capital are short (SPY)

Jefferies & Company, Inc makes a market in the securities or ADRs of Research in Motion, Inc (RIMM)

Camilla Sutton
**No disclosures

Joel Prakken
**No disclosures




CNBC.com with wires.

Symbol
Price
 
Change
%Change
BARC
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CS
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DBK
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EUO
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SDS
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SIE
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SPY
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ISH BAR 20YTB
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