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Market Pulls Back After Strong Week

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MARKET PULLS BACK AFTER STRONG WEEK

Wall Street capped a strong week on the downside Friday, with the Dow and S&P closing in negative territory. Gloomy comments made by CEOs after a White House meeting sparked profit taking .

JPMorgan Chase Chief Executive Jamie Dimon said "March was a little rough" and Bank of America's Ken Lewis said "trading book for March was not as good" as it was the first two months of the year, pushing bank stocks and the overall market lower.

"Given that's kind of where this rally started in the second week of the month with Citigroup and Bank of America indicating they had a good first two months (of 2009), it would make sense that these comments would have a negative impact," says Peter Jankovskis, director of research at OakBrook Investments.

Strategy Session with the Fast Money Traders

I don’t love that Jamie Dimon said March was a difficult month, muses Karen Finerman. For the rally to continue I think we need to see continued improvement in the banks.

I think the rally is still in tact, counters Guy Adami. As long as the S&P closes above 800 I’d stay long.

The Vix stayed below the 200-day moving average and that’s good news, adds Tim Seymour.

It seems to me the market is trading in a range, says Jeff Macke. We’ve hit resistance on both ends.

I’m keeping an eye on the mark-to-market issue, adds Finerman. If the government eases regulations that could send financials higher. And I'm also keeping an eye on the stress test results which should be available at the end of April.

But what happens if a bank fails a stress test, adds Macke. They can’t just release that information indiscriminantly or the shorts will have a field day.

I'm watching to see who pays the TARP money back first, says Adami. To me that will be the bogie for financials.

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TECH’S BIG WEEK

A decline in big-cap technology shares dragged the Nasdaq back in the red on Friday. (Gains on Thursday pushed it into positive territory for the year but they didn’t hold.)

Among the biggest drags; Intel which said it might issue up to $1 billion in stock. Also Apple and Microsoft were down.

I think Intel is one of the more interesting stocks in the sector, says Guy Adami. And if you’re long Hewlett-Packard I think it’s probably run too far too fast; take profits.

A lot of the tech companies have strong balance sheets, adds Tim Seymour. I think there could be M&A activity in the space. And if you’re looking for a trade look at Taiwan Semiconductor ; they should benefit from the China buildout.

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COMMODITY STOCKS PULL BACK AFTER STRONG WEEK

A drop in commodity prices weighed on stocks in the materials sector with crude oil’s decline dragging down both Exxon Mobil and Chevron . Aluminum producer Alcoaalso slid noticably.

Alcoa is all about their balance sheet, explains Tim Seymour. I don’t think aluminum prices will go back to where they were last year but they’ve probably found a base.

I think Alcoa is all about the debt that they were able to raise, adds Jeff Macke. That should bode well.

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FERTILIZER STOCKS

UBS started coverage of four U.S.-based fertilizer companies, including Mosaic , and said that while fertilizer demand will be down again in 2009, rising grain prices indicate a recovery in 2010.

"Fertilizer share prices are driven by the grain price outlook," analyst Don Carson wrote in a note to clients

Don’t chase these stocks, counsels Guy Adami. I think you’ll have an opportunity to buy them lower.

Crop demand in the US should be enough for these stocks to continue rallying, counters Tim Seymour.

Keep an eye on Potash, counsels Jeff Macke. I’m taking some profits but I’ve had gains.

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EMERGING MARKETS POST RECORD MONTH

Emerging markets funds report the largest weekly inflows since May 2008. Why are investors taking more risk and putting more money into emerging markets?

I don’t think it means emerging markets are off to the races, muses Tim Seymour. But I think you can be cautiously optimistic. Activity in Brazil and China could give the whole space a reason to rally.



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Trader disclosure: On Mar. 27th, 2009, 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 (AAPL), (POT), (WMT), (SDS), (GE), (GS); Macke Is Short (BRK.B); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (BAC), (FXI), (EEM), (TTM), (RIO), (TSO), (WFC); Finerman's Firm Is Short (IJR), (MDY), (SPY), (USO), (IWM); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (MSFT); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Is Short (BPO)

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