DOW NEARS 5 1/2 YEAR LOW
The Dow slid within striking distance of the November bear-market low on Tuesday, despite the fact that President Obama signed the economic stimulus into law. Investors found themselves grappling with grim manufacturing data and concerns about the banking crisis in Europe and worried that the recession is quickly getting worse.
The day's losses brought the Dow down 13.9 percent since the start of the year, while the S&P 500 is down 12.6 percent and the Nasdaq has fallen 6.7 percent.
Strategy Session with the Fast Money Traders
If you’re going to buy into this market you have to also buy protection, counsels Pete Najarian. The market is moving very fast.
And I’d also stay small, adds Tim Seymour. Stay light and lean and keep some of your portfolio in cash.
That’s a great point, exclaims Pete Najarian. I see too many traders going in with too much at risk. Dip a toe but not a foot.
Turning attention to the stimulus… if you want to play the stimulus you can look at First Solar and/or Energy Conversation Devices – but only because they showed they can make money, now, counsels Najarian.
To play the stimulus I’d play the PowerShares Water Resources
for water purification, adds Tim Seymour.
Or look at URS Corp., adds Guy Adami, it’s an engineering firm.
I’m staying with nat gas names, adds Karen Finerman. You could look at Calpine but you should know it’s very levered.
And the stimulus in China could bode well for coal down the road, but not immediately, adds Pete Najarian.
What do you think? Tell us now!
FINANCIALS PLUMMET WORLDWIDE
Financials plunged all around the globe on concerns that the next shoe to drop in the financial crisis could come from Europe. According to Moody’s, the worsening economic conditions in Eastern Europe could hit major Western banks.
This could be big, says Tim Seymour. Many Western European banks have loans out to Eastern Europe. And if they default, it could ripple to insurance firms.
Bad news surfaced for the whole sector on Tuesday, says Karen Finerman. The American Express default rate jumped markedly, she explains. That bodes poorly for Capital One as well as other banks with exposure to credit cards.
I’m seeing a lot of put action in Capital One, adds Pete Najarian, which suggests big investors expect the stock to go lower.
FEAR: GOLD HITS 7-MO. HIGH
Gold hit a fresh seven-month high on Tuesday after weaker-than-expected U.S. manufacturing data and fears that the recession was getting much worse in Easter Europe sparked a flight to safety.
If you want to play precious metals, I’d look at platinum, says Tim Seymour. You can play it with the PTM. Or you prefer gold, I'd play it with miner Gold Fields .
If you’re long gold I’d have a trailing stop, counsels Guy Adami. In other words, raise your stop loss levels accordingly.
OIL DROPS 7% ON TUESDAY
U.S. oil prices fell nearly 7 percent to below $35 a barrel on Tuesday as grim economic indicators hammered markets and raised concerns about slumping demand.
If oil moves up the solar names could move up a lot, says Karen Finerman. That’s because right now it’s expensive to switch to alternative energy considering oil is so chear. But, with the stimulus passed there will surely be incentives to switch.
WHALE WATCHING: THE BIG WHALES SURFACE
Traders are going into whale watching mode as big Wall Street players disclose their holdings.
Hedge fund manager David Einhorn reported holding the SPDR Gold Shares ETF and the Mkt. Vector Gold Miners ETF .
Meanwhile money manager John Paulson reported an increased stake in Rohm & Haas , Genentech and Philip Morris .
But perhaps the disclosure getting the most attention comes from Warren Buffett. His Berkshire Hathaway slashed its holdings in Johnson and Johnson to just 28.6 million shares as of December 31. That's a drop of almost 54 percent.
I'm surprised that Buffett reduced his position in JNJ, says Guy Adami. I continue to like the stock.
And I like what Einhorn is doing in the gold trade, adds Pete Najarian.
BATTLE THE BEAR: HEALTH CARE
The healthcare sector kept going strong despite the rough trading day. Medtronic reported fiscal third-quarter earnings Tuesday that edged past Wall Street expectations, as tighter cost controls and new demand for spinal implants offset slowing sales the company's heart devices.
If you want to play the space I like the XLV, counsels Pete Najarian.
BREAKING NEWS: CRHYSLER NEEDS MORE MONEY TO SURVIVE
Chrysler on Tuesday told the U.S. government it needs even more taxpayer money to survive. General Motors is expected to do the same.
Acknowledging that industry conditions are worse than expected when it made the case in December for a government bailout, Chrysler requested an additional $5 billion in government loans. It originally said it would need $3 billion more.
And in a live report CNBC’s Phil Lebeau reports that the UAW is reworking their national contracts with all 3 automakers. He says that’s a significant development and key for the automakers in their attempts to show lawmakers that they can be competitive with overseas automakers.
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Trader disclosure: On Feb. 17th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (AA), (BAC), (EEM), (XOM), (FXI), (YUM); Seymour's Firm Owns (VIP); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (CELG), (ENER); Najarian Owns (GS) Calls; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (CHK) Put Spread; Najarian Owns (GDX) Call Spread; Najarian Owns (GLD) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (STI) Call Spread; Finerman's Firm Owns (AET), (CRXL), (MSFT), (XBI), (FL); Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Is Short (USO), (VNO), (BBT), (IYR), (IJR), (IWM), (MDY), (SPY)
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