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S&P Breaks Key 700 Level

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S&P 500 BREAKS KEY 700 LEVEL

Stocks fell in volatile trading on Tuesday, with the S&P ending below 700 for the first time since October 1996. Persistent uncertainty about the amount of money needed to shore up the financial system overshadowed a hunt for bargains.

"700 is an amazing number when you think 16 months ago, we were at the high," said Howard Silverblatt, senior index analyst for Standard & Poor's.

"It's psychological and obviously, it reinforces the negative situation, especially where there's not a lot of credibility out there."

The S&P is down nearly 23 percent for the year so far and has given up more than 55 percent since the high hit in October 2007.

Also comments from Fed Chairman Ben Bernanke dragged down stocks on renewed fears that the market is nowhere near its bottom in terms of toxic assets. Bernanke also lashed out at AIG . “If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG. AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a hedge fund basically that was attached to a large and stable insurance company.”

Comments from Treasury Secretary Timothy Geithner were hardly more buoyant. He said the Obama administration will work with Congress to determine the size and shape of future efforts to shore up banks and acknowledged the cost of the financial bailout may rise.

Strategy Session with the Fast Money Traders

The market seems to be coming to a point of understanding which I would argue is good, says Dylan Ratigan. It seems the market understands that AIG involved crooks. I would like to see AIG investigated for insurance fraud.

I would also like to see the government identify the crooks, adds Jeff Macke. That would go a long way toward healing.

Meanwhile the President came out today and said valuations of stocks are attractive. Speaking at a press conference on Tuesday, Barack Obama said share prices are a potentially good deal at current levels. Here’s the quote, “buying stocks is a potentially good deal if you’ve got a long-term perspective on it…”

That makes me nervous, says Karen Finerman. It makes me feel like he’s putting spin on something -- perhaps to disguise something.

There’s no way to know how cheap stocks are, says Pete Najarian. I don’t know how the President can possibly value stocks.

If you’re trying to find out if a company is cheap look at cash flow, says Tim Seymour. I like Turkcell for that very reason.

I’d look at Northern Trust , adds Pete Najarian. If you look down deep their numbers are impressive.

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AFTER HOURS ACTION – PALM

Palm warned that its quarterly revenue will miss Wall Street expectations due to lower demand for its older phones, the weak economy and later-than-expected U.S. shipments of its Treo Pro.

Analysts are impressed with the Pre but it will take time to get on the market, says Pete Najarian. But on this dip I will likely add to my position.

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INVESTORS BID GE LOWER

General Electric weighed down the market as investors fretted about the conglomerate's future.

Meanwhile, CEO Jeffrey Immelt acknowledged on Tuesday the company's reputation had been "tarnished" but his hope that GE could reinvent itself failed to stem a nearly 8 percent fall in its shares.

GE is already identifying parts of its hefty finance arm that it will exit in the coming years, Immelt said in his annual letter to shareholders. He also said the Obama administration's stimulus plan held promise for the company, which is a major player in the energy and healthcare information services sectors.

They need to have an investor day and lay out what’s in that opaque box otherwise known as toxic assets, muses Jeff Macke.

The options activity in the June 2-and-a-half puts seems ridiculous to me, adds Pete Najarian. They have exposure to the financial services space but they’re not a bank and I don’t see any reason for the stock to move to that level.

I want a better sense of their credit quality before I can feel better about this stock, adds Karen Finerman. I don’t get the sense that they have told us.

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TOPPING THE TAPE: COMMODITY STOCKS

U.S. crude futures edged up in seesaw trading on Tuesday, pressured along with Wall Street as concerns about a wilting economy kept curbing rallies. Crude had an early bounce above $42 a barrel after sliding 10 percent on Monday.

"It's all outside markets. Commodities markets are not a big market (compared to stock market)," says Chris Jarvis, senior analyst, Caprock Risk Management. "Commodities want to go higher but we've got the equities markets going down so there's no reason to go crazy and go long on them."

The oil chart over the last 3 months looks fine to me, says Tim Seymour.

If you’re going to play the commodity space make sure you’re using puts for protection, counsels Pete Najarian. And keep an eye on copper . It has yet to break out over 160 but if it can sustain or break higher then copper producer Freeport McMoRan could break higher too.

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GM FEB. SALES CHOPPED IN HALF

Major automakers' U.S. sales fell sharply in February, a sign that the new car market could hit the lowest point in more than 27 years as huge rebates and low-interest financing fail to spur fearful consumers to make a major purchase.

General Motors reported a bigger-than-expected 53 percent drop in February U.S. sales on Tuesday and announced a steep reduction in targeted second-quarter production compared with a year ago.

If you want to make sure you’re not sucked into this whole mess, I’d steer clear of the entire space including auto parts firms like Borg Warner , counsels Karen Finerman.

Johnson Controls is another stock that’s upstream of the car makers but I’d still be careful, adds Jeff Macke.





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Trader disclosure: On Mar. 3rd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MS), (TM), (AAPL), (MOS); Macke Owns (GE) Puts; Seymour Owns (EEM), (BAC), (FXI); Seymour's Firm Owns (BIDU), (COP); Najarian owns (GDX), (PALM), (BX); Najarian Owns (DNA) Calls; Najarian Owns (DOW) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (GE) Put Spread; Najarian Owns (MS) & (MS) Calls; Najarian Owns (MOS) & (MOS) Calls ;Najarian Owns (V) & (V) Calls; Finerman's Firm Owns (PBR), (RIG); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (WFC) Preferred; Finerman Owns (WFC) Preferred; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BAC), (BBT), (VNO)

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