Dow Falls To Fresh Bear Market Low

DOW FALLS TO FRESH BEAR MARKET LOW

By Thursday’s close, the Dow was trading at a level not seen in more than 6 years, falling beneath its former bear market closing low set on November 20^th.

Shares of the big banks were a major drag on the Dow with their stocks tumbling on whispers of nationalization. Citigroup fell to almost 18-year lows on Thursday, with Bank of America also plunging.

"There seems to be a whiff in the air that we're moving much closer to (bank) nationalization, which would effectively wipe out stockholders," says Paul Nolte, director of investments at Hinsdale Associates.

In addition, insurance companies' stocks plummeted -- led by Hartford Financial Services Group -- as declining stock and bond market values added to concerns about weakening investment portfolios and capital positions. Also, Fitch cut its ratings on Prudential Financial Inc , sending its share price down sharply on concern the downgrade would prohibit the company from accessing the government's commercial paper program.

Strategy Session with the Fast Money Traders

The news with Prudential is dangerous, dangerous stuff, says Tim Seymour.

I’ve been buying Bank Of America preferred and shorting the common stock against it, explains Karen Finerman. I don’t think anyone should buy common over preferred, right now.

It’s probably not possible for the market to do much of anything until we know what’s going on with the financials, says Pete Najarian.

The level of uncertainty is what’s driving this market right now, adds Joe Terranova. I'm keeping an eye on the consumer banks. Those with consumer credit card risk are getting hit right now.

I wouldn’t get involved with the money-center banks, counsels Pete Najarian. Instead I’d look at companies that are working such as Visa or Northern Trust ; firms that have side-stepped the crap.

I’d get long Morgan Stanley and Goldman , counters Joe Terranova and forget all the other nonsense.

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OIL SURGES 14%

Oil prices jumped 14 percent to top $39 a barrel on Thursday after U.S. government data showed an unexpected fall in crude inventories last week due to lower imports and higher demand.

The draw snapped a seven-week streak of crude builds.

Expiration is on Friday, reminds Joe Terranova. I think the fact that they didn’t go lower ahead of expiration suggests oil prices could be stabilizing. And I remain long the Canadian dollar ETF as a play on crude. (Click here for more on this trade.)

Out one year oil is still trading significantly higher than it’s trading in the near-term, explains Tim Seymour. That makes me bullish long term.

I’d look at Exxon-Mobil , adds Pete Najarian. Everyone on the Street hates the stock but it continues to perform. That’s impressive.

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H-P CRUNCHED ALMOST 10%

Technology stocks weighed on the market with Hewlett-Packard falling precipitously after its fourth-quarter sales fell short of Wall Street's expectations and it reduced its forecast.

I like Hewlett- Packard at current levels, says Pete Najarian.

In technology, I think Dell is interesting as a value play but I don’t own it because I want to hear more about the business model, adds Karen Finerman. But it’s so cheap I almost can’t stand it.

If you want to play notebooks I’d look at semiconductors , counsels Tim Seymour. Inventories are building.

At some point that trade could work, but the competition in chips is intense, counters Pete Najarian. Those chip companies cannibalize themselves. And also I’d be cautious on Applied Materials due to the large number of puts trading in the options markets.

I’d like IBM , adds Joe Terranova. Put that one on your radar.

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Trader disclosure: On Feb. 19th, 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), (BAC), (EEM), (FXI), (PBR), (TM); Seymour's Firm Owns (VIP); Terranova Owns (KCE), (XBI), (AMGN), (FXC), (DIS); Terranova Owns (AMGN) Puts; Terranova Owns (IBM) & (IBM) Call Spread; Finerman's Firm Owns (RIG), (MSFT), (NKE), (FL); Finerman's Firm Owns (DNA) & (DNA) Call Spreads; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BBT), (VNO); Najarian Owns (CELG); Najarian Owns (EEM) Call Spread, (GDX) Call Spread, (GLD) Call Spread, (MOS) Call Spread, (STI) Call Spread; Najarian Owns (AMAT) Put Spread, (CHK) Put Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GS) Calls; Najarian Owns (GE) Puts; Najarian Owns (HPQ) Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (WFC) & (WFC) Calls

Kass Owns (RIG), (FCX)

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