'Fast Money' Recap: Oil Boils

Most sectors suffer while oil is on fire. The trading crew sees power in the rails.
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The U.S. stock market took a belly flop Friday as a record-setting climb in oil prices made for splashy headlines and sparked an equity selloff. The Dow plunged 3.1%, the S&P 500 took a 3.1% bath and the Nasdaq sank 3%.

On

CNBC's

"Fast Money" TV show, the traders observed that oil spiked 8% today and the stock market experienced its worst losses since the "Shanghai Swoon" of Febuary 2007. Pete Najarian said that bulls should be nervous going into the weekend. He said that oil and natural gas were ripping. He said the rise in those prices combined with problems in the financials hurt the market. The

Financial Select Sector SPDR

(XLF) - Get Report

"got crushed," he said.

Jeff Macke said rising energy prices are "killing everything." It's a bubble, he said. He pointed out that every bubble has a great story behind it, but the rally in energy hearkens to other bubbles.

Guy Adami said that the action is indicating that crude oil is inelastic. He pointed out that

General Motors

(GM) - Get Report

reported that auto sales declined more than expected.

Karen Finerman said that her first instinct on today's down tape is to reduce the size of her positions on both sides. With volatility up, protection gets expensive, she said. She also said she would prefer not to sell puts in this environment.

Macke said that the best strategy is to sell any upward move that looks giddy and to buy absolute panic. He said the hard trade is to build positions here. He said he's been looking for the dip in names like

Citigroup

(C) - Get Report

,

Lehman Brothers

(LEH)

and

Goldman Sachs

(GS) - Get Report

. He urged investors to "suck it up and buy in scale."

Adami said that there are tells in stocks that performed well despite the down day. He said viewers should stick with what works -- natural gas and the railroads.

Najarian recommended being a buyer in the financials, but said investors shouldn't rush in. He cautioned against trying to pick a bottom, and recommended using put protection on long positions. He said that the selloff in the

Oil Service HOLDRs

(OIH) - Get Report

at the end of the day was profit-taking by investors who had been hurt in other areas of the market.

The transportation sector and the airlines got hurt. Macke said the airlines are going to be a long story, and he said investors shouldn't chase airline stocks higher.

Adami said that transports are about trains. He said

CSX

(CSX) - Get Report

still has pricing power. He said airline

AMR

(AMR)

has been a trade.

Najarian recommended sticking with the rails for their pricing power.

Of discretionary consumption, Finerman said that it's hard to ignore the major spike in oil prices. Jeff Macke said that unemployment and crude have created a "double whammy" for the consumer. He said the only retailers he's interested in are

Wal-Mart

(WMT) - Get Report

and

Costco

(COST) - Get Report

Technology stocks got beaten today. Najarian said he thinks the decline is an opportunity. He said that impressive global numbers from

Dell

(DELL) - Get Report

make that stock interesting. He said the pullback in

IBM

(IBM) - Get Report

is an occasion to buy and he's also interested in

Cisco

(CSCO) - Get Report

and

National Semiconductor

(NSM)

. Tech is going to work in the second half of the year, he said.

Adami said

Intel

(INTC) - Get Report

is interesting at $23. He said it was a positive tell that the stock didn't trade that poorly despite news of a Federal Trade Commission investigation of the company.

Pfizer

(PFE) - Get Report

and health care stocks have been annihilated lately. Finerman said she's not interested in the unique risk of an individual stock, so her fund bought some of the

Pharmaceutical HOLDRs

(PPH) - Get Report

ETF.

Macke said Pfizer is "just death." Najarian called the stock "broken," and directed investors toward

Amylin

(AMLN)

and

Isis

(ISIS)

instead. The companies are great diabetes-related names, he said.

Unemployment rose the most month to month that it had in a long time. Adami said that investors should hope it's a lagging indicator.

Natural gas and coal continued to work. Najarian said he would add to positions in

Chesapeake Energy

(CHK) - Get Report

and

Petrohawk

(HK)

.

The financials had a terrible week. Macke said that when the sector reports earnings the week after next, it will be an "ugly slog." Najarian said the financials have a lot more issues to disclose and urged investors to stay away.

Joe Terranova, chief investment strategist at Phoenix Investment Partners, joined the show to talk about oil's record run. He said long-dated contracts did not see the same buying pressure as more immediate contracts. He said that the New York Mercantile Exchange's trading floor is underpopulated right now, meaning there's no one to take the other side of buy orders. He predicted more violence and volatility in the oil market.

Quicker Than the Ticker

Finerman sold

Valero

(VLO) - Get Report

calls as the stock began to go down. Adami helped pick a bottom in Dell. Najarian noticed call activity in

Nucor

(NUE) - Get Report

. The calls netted an 80% profit.

"Commodities King" Dennis Gartman joined the show to talk about oil. He said he's afraid to trade the stuff. He said it's an illiquid market in a short-covering rally.

Tim Seymour discussed overseas trading possibilities. He said that oil consumption in China could reach U.S.-like levels by 2020. He pointed out that China and other countries subsidize oil, and that if they remove subsidies, the market over there will change. He said emerging-market currencies will probably go higher. He also said

Schlumberger

(SLB) - Get Report

and

Halliburton

(HAL) - Get Report

are solid plays on Russia exposure.

Trader Radar

Wal-Mart traded with unusual volume today.

The traders discussed the possibility that

Apple

(AAPL) - Get Report

release the new iPhone Monday. Najarian said the news could send the stock higher.

Farmer Rogerb Neshem joined the show to discuss the recent price increase in corn. He said the corn crop is in big trouble. He said with the cool weather, the farmers will come up short. He also said farmers would be having "big trouble" if food prices were to decrease. He said he sold shares of

Agrium

(AGU)

this week. He recommended

DuPont

(DD) - Get Report

and

Monsanto

(MON)

.

Fast Fire

Najarian had chosen

Yingli Green Energy

(YGE)

. He said the company's silicon-based products hurt its earnings. He said

Energy Conversion Devices

(ENR) - Get Report

is a better stock.

Finerman had chosen

NYSE Euronext

(NYX)

. "I was wrong," she said.

Macke had picked

J. Crew

(JCG)

. He said to buy the close and walk away from the stock.

Adami had selected

Deere

(DE) - Get Report

. He said he still thinks the stock will go higher, but investors should stop out at $79.50.

Final Trade

Najarian selected Energy Conversion Devices.