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Halftime Report: Navigating The Nervous Market

The sell off intensified on Tuesday with financials dragging down both the Dow and S&P 500. Negative sentiment prevailed despite relatively strong economic data, which showed manufacturing expanded in August for the first time since January 2008.

It appears investors remain concerned about the recovery and have decided to take some money out of the market, playing it safe ahead of the government's August employment report, which comes out Friday.

How should you navigate this nervous market?

Instant Insights with the Fast Money Traders

I wasn’t impressed by the economic numbers, says Patty Edwards of Storehouse. I’m seeing a lot of government stimulus in the numbers but not growth in the underlying economy. Combine that with the market action and I think this could be the beginning of the next leg down.

I also think the stock market may be ahead of itself right now, adds Dennis Gartman, author of the Gartman Letter. And don’t forget September is typically a volatile month.

Looking at the financials, I’m keeping a close eye on Wells Fargo, says Fast Money trader Pete Najarian. There’s been highly unusual options action in that stock.

If you’re trading Goldman I’d take profits if it closes below $158, adds Greg Troccoli of Opalesque.

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SMARTPHONE TRADE

On Tuesday Credit Suisse raised its estimates for smart phone sales over the next 18 months taking an upbeat view on RIM and Apple .

Credit Suisse expects the smart phone market to eventually reach 1.5 billion phones, while only about a fifth of that have been sold. "We believe smart phones represent one of the most attractive secular trends in technology," the report says.

What’s the trade?

I also like the space and am keeping a close eye on Apple, says Pete Najarian.

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HOUSING SHARES ROLL OVER

Pending sales of existing homes raced to a two-year high in July, a real estate trade group said on Tuesday, giving more evidence that a recovery in the housing market was under way. Despite the bullish news the Homebuilders ETF which tracks the sector moved lower.

What’s the trade?

I’m watching Pulte Homes, counsels Greg Troccoli. I have a stop in around $11.75. But I’d be a selective buyer of this sector on the dip.

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COMMODITY STOCKS FALL ON GROWTH CONCERNS

Despite stabilization on the Shanghai composite, commodities investors remained jittery on Tuesday with investors selling many natural resource names including copper producer Freeport McMoRan.

What’s the trade?

I think the move in commodities has more to do with a stronger dollar than anything else, muses Dennis Gartman.

The move may be an opportunity to play pullbacks, counsels Pete Najarian. But pick your price points carefully.

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OIL CAN’T HOLD ON

Although prices moved higher immediately following the strong ISM data, by midday oil was trading lower, below $69 a barrel dragged down by the weak stock market and the potential of a stronger dollar.

What’s next?

I think the bias is to the downside, reveals Addison Armstrong of Tradition Energy. It’s a very nervous market. However, patterns in the charts suggest resistance should be around $68.


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Trader disclosure: On Sept. 1, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (APPL), (BAC), (F), (SBUX); Seymour's Firm Is Short (FXI), (PBR), (RIMM); Terranova Owns (AMZN), (SU), (WFT); Terranova Is Short (SHLD), (TM); Terranova Owns (GS) Puts; Terranova Owns Dec. Gold Futures; Terranova Works For (VRTS); Najarian Owns (BAC) & Short (BAC) Calls; Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian owns (C) Calls; Najarian Owns (HGSI) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (JPM) & Is Short (JPM) Calls; Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (PALM) Calls; Najarian Owns (TEVA) Calls; Najarian Owns (V) & Short (V) Calls; Najarian Owns (WFc) Put Spread; Najarian Owns (YHOO) Call Spread ; Najarian Owns (MOS) Calls

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