The Dow has it’s biggest drop in over 2 months. Is it time for a big correction? Don’t be afraid!

Playing the Selloff

Strazzini: TXN had a nice pop today, but their sales numbers are scary. Take your profits off the table.

Bolling: TXN chart is very scary looking; watch out if it drops under $28.

Do not buy GOOG ahead of earnings. Wait and see what happens to the stock around $480.

Don’t buy YHOO until it’s over $30 a share.

Buy MSFT down to $27.50, but not below. Bolling likes MSFT better than YHOO and GOOG.

Macke: Buy quality companies into the selloff. His picks are:

SUN
SIRI
UA
INTC

Strazzini: It’s too early to start buying stocks on the cheap. Wait until the market settles, then look at KR, GS and MER.

Bolling adds: Let this market find a home before you start buying!

The Better Drug Trade

Guest Kris Jenner, T. Rowe Price Bio Fund Manager: There are great opportunities in Healthcare across the board right now, since the sector has been out of favor on Wall Street for a while.

Jenner: You won’t make a lot of money with PFE. Recommends the following stocks instead:

GILD (Owns the HIV market)
AMGN
DNA

Adami: AMGN is cheap right now, great company.

Strazzini: Likes the Generic drug companies, says they will be back in favor again soon. Buy BRL, it will be going to $60.

The Double Down Trade

When is it time to cut your losses and when to add to a losing stock?

Bolling: Commodity bull markets last 10-20 years, and we’re about 4 years into this one. He says that you should never add to a losing position. Add only to your stocks that are working. Don’t own energy-driven equities right now, buy RIO.

Strazzini: Only double down in a position if the fundamental reason you originally bought the stock for hasn’t changed.

Macke: If you have to supply a long-winded justification for why you own a particular stock, you shouldn’t be in it.

Street Fight

Pete Najarian of OptionMonster.com vs. the Fast money Five.

Najarian: PEIX is a great ethanol stock, there’s still call buying activity going on with this stock ahead of the State of the Union Address by President Bush.

Bolling: If Bush calls for $60B to ethanol companies, the economy will tank. SELL PEIX into the upside.

Najarian: Buy the rumor, sell the fact. Agrees that you should sell PEIX into the upside tomorrow. Says that OIH will continue to fall more.

Strazzini: Crude has a ways to fall, but most oil services stocks are still undervalued right now.

Adami: Buy OIH.

Macke: GPS is a BUY. They just dumped their CEO and the stock will be going up.

Najarian: No interest at all in GPS and has no plans to get in. The Retail sector appears to be dead. Likes the Financial Services sector, shows lots of strength and has lots of upside left yet.

BOOMER TRADE

How you can profit from retiring Baby Boomers.

Adami: USB pays a great dividend (4.5%)

Strazzini: Another good option is to buy any of the following ETFs that are dividend-weighted:

DHS
DOL
DIM

Strazzini adds that these ETFs are a fantastic way to diversify and get great dividends.

>>Happy 52 Week High to TAP<<

The Short Squeeze

When short sellers bet wrong and a stock goes up, you get a “short squeeze”, which results usually in a fast and hard short-term bull run.

Strazzini: PII is shaping up for a great short squeeze pump, should pop a couple bucks a share.

Adami: SUP is also shaping up as a great short squeeze play.

Trading with Joe Theismann

Joe likes the Colts to win the Super Bowl.

Theismann’s stock picks: EBAY, AAPL and SIX.

Macke: SIX has a great CEO, but a bad company.

Bolling: AGrees with Joe that traders should trade what you know, and to set a downside target on every stock you buy to minimize losses in the event of a bad trade.

FINAL TRADES:

Bolling: If Natural Gas gaps open, buy it!

Adami: AAPL is a BUY.

Strazzini: MDT, STJ and BSX are BUYS.

Macke: GPS is a BUY.

Bolling adds: Watch the $30 price on YHOO…important number!