"And the reason to be nervous is that the market at that point should have gone higher," he said. "It did not go higher—a classic example of 'good news, bad action' on the confluence of positive indicators that week. We're in the process of correcting."
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While Terranova remained bullish over the long term, the next quarter or two might not be so rosy, he said.
"Three to six months from now, what do I think? I think that when this correction ends, it was a tremendous buying opportunity," he said. "But I don't think this correction ends until we have a down-500 day. And I think the potential for that in the next month is there."
Steven Weiss of Short Hills Capital pointed to the divergence between the S&P 500 and the Russell 2000.
"I'm a little nervous," he said. "The bet is: Are small caps right? Or is the S&P right? So, when you take a look, you sort of get spoiled by how the S&P's performed this year because it's still having a fairly decent year on the back of last year.
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"But small caps, the Russell 2000, that's down over 4½ percent, was down 6 percent last month, second month out of three we saw that. Emerging markets are down on the year. Europe's down on the year."
While Weiss said that "it's all pretty ugly out there," he expected third-quarter earnings to reinvigorate the S&P and bolster confidence in the U.S. economy.
"In the interim, you've got to really come to grips with what your view is on rates," he said. "I think rates go up sooner rather than later."
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OptionMonster's Jon Najarian noted that following negative economic news in Germany, Italy and the United States, as well as Freddy Mac and Fannie Mae and the first U.S. Ebola outbreak in Texas, stocks were down just 1 percent.
Five percent, he added, was more apropos.
"That's what I want in reaction to that much bad news. I mean, that's a heck of a lot of bad news to throw at the market," he said. "If you had that much good news thrown at the market, we'd be up a lot more than 1 percent."