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S&P Loses October Gains

Stocks tumbled on Wednesday in a broad sell-off, sending the benchmark S&P 500 lower for a fourth straight day, erasing October gains.

The negative sentiment was triggered by weak housing data, which showed sales of newly built single-family homes fell 3.6 percent last month, their first drop since March.

The bearish data heightened concerns about the pace of the economic recovery with financials, technology, materials and industrials all bearing the brunt of the sell-off as investors reassessed their bets.

What must you know?

The market is worried about the economy and what it will look like after stimulus comes out of the market, muses Tim Seymour. I think that’s what was behind the sell-off not the housing data per se.

And a lot of the economic data coming out suggests that the recovery isn’t as strong as we’d hoped, adds Joe Terranova. But what that says to me is, the stimulus has to remain in place, at least a while longer -- and that means a weaker dollar.

I’m watching some broad market bellwethers including Goldman, Apple, and FreeportMcMoRan , reveals Pete Najarian. All 3 names just continue to go lower and lower.

I’m focused on the Vix, says Karen Finerman. Wall Street's favorite fear gauge, ended up 12.5 percent, its biggest one-day percentage gain since August. We are dramatically higher but I’m using that as a buying opportunity.

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TECH TRADE IN TROUBLE…NASDAQ LOWER FOR OCTOBER

The Nasdaq also logged its fourth straight daily drop with the index breaking below the 50-day moving average for the first time since July, a bearish technical signal.

What must you know?

The technical signal forced professional investors out of the market, explains Joe Terranova. That added to the negative psychology of the market. But I boughtIBM and Qualcom on Wednesday, he adds . They were both resilient in a tape that went considerably lower. That speaks volumes.

And on the fundamental side, SAP issued a terrible 4th quarter outlook, adds Tim Seymour. That led investors to believe that businesses may not be willing to spend on software yet and it dragged down tech.

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GOLDMAN'S CRYSTAL BALL

On Wednesday Goldman Sachs cut its forecast for third-quarter U.S. gross domestic product growth to 2.7 percent from 3.0 percent.

In a short client note released after the durable goods report, Goldman Sachs economists Jan Hatzius, Ed McKelvey and Andrew Tilton noted that “shipments of capital goods and total durable goods inventories are the last major piece of information feeding into tomorrow's preliminary report on GDP growth."

The government will release its first estimate of third-quarter GDP on Thursday.

What must you know?

Considering how accurate they were with the jobs reports earlier in the month, I wouldn’t be on the other side of that trade, says Joe Terranova.

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BREAKING NEWS: BOEING

In breaking news, CNBC’s Phil Lebau explains that Boeing chose its South Carolina facility over Seattle as the location for a second final assembly site for the 787 Dreamliner program.

"Establishing a second 787 assembly line in Charleston will expand our production capability to meet the market demand for the airplane," said Jim Albaugh, president and CEO of Boeing Commercial Airplanes.

What must you know?

That’s nice, says Karen Finerman. And I know we’ve seen product delays before but at this point I’d be shocked if they meet their timeline.

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COMMODITY TRADE IN TROUBLE

Oil fell below $78 a barrel on Wednesday after a U.S. inventory report showed a surprise build in gasoline stocks, increasing doubts about the strength of demand.

Also, the dollar strengthened against a basket of currencies on Wednesday, adding pressure to oil prices. As the dollar rises, dollar-denominated crude becomes more expensive for holders of other currencies.

What’s the commodities trade?

Earnings Calendar: Oil

Thursday: XOM, PDE, PTEN, SII
Friday: CVX

Remember Exxon is a defensive energy play, explains Joe Terranova. This stock tends to go higher when oil goes lower.

In the space I’d keep Smith International and Pride on your radar, counsels Pete Najarian.

In commodities I like US Steel, says Tim Seymour. Personally, I'd take a shot with this name.

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SENATORS EYE EXTENDING HOME CREDIT TO END-APRIL

According to a Reuters report, Congress is not only poised to extend the home buyer tax credit for first-time homebuyers through April -- but also expand coverage to repeat buyers.

The report said the tax credit would remain at its current $8,000 for first-time buyers, while a new credit for repeat buyers of a primary residence who have been in their house for at least five years would receive a credit of $6,500.


Is there a trader here?

I think DR Horton is the play because it has the most exposure to home buyers, muses Joe Terranova.

It seems to me that the market has been pricing this in, muses Pete Najarian.

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AFTER HOURS ACTION: FIRST SOLAR

Shares in solar energy companies fell in extended trading on Wednesday after industry bellwether First Solar said third-quarter revenue was far below Wall Street estimates.

What must you know?

Solar names tend to trade in tandem with the price of oil, explains Karen Finerman.

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THE OBAMA TRADE

Health care reform has taken yet another turn. Senate Democratic leader Harry Reid's decision to include a government-run "public" option in the Senate bill failed to sway about a dozen moderates who said they wanted more details before making their decisions.

Meanwhile, Wayne Deveydt, Wellpoint CFO tells CNBC, "Right now the overhang of health care reform continues to be there and I dont think its going to go away until investors can see with clarity what exaclty is going to come from this reform"

So, what’s the trade?

If you want to trade health care, I’d look at the health care equipment stocks, counsels Joe Terranova. Personally, I like Covidien because there may be pent up demand.

My play is Becton, Dickinson, adds Karen Finerman.



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Trader disclosure: On October 28th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (BX), (EEM), (INTC), (MSFT), (FXI); Najarian Owns (BX) Call Spread; Najarian Owns (EXPE) Calls

Najarian Owns (GE) Calls; Najarian Owns (LAZ) & (LAZ) Puts; Najarian Owns (MYL); Najarian Owns (RIMM) Call Spread; Najarian Owns (YHOO) & (YHOO) Puts; Terranova Owns (IBM), (QCOM), (GS); Finerman Owns (PDE), (TGT), (WMT), (BAC); Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (PDE), (PBR), (RIG); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (UNG);

For
Deborah Weinswig
Citi Owns (TGT)
Citi Has Received Compensation for Investment Banking from (TGT)
(TGT) Has Been A Client Of Citi in the Past 12 Months
Citi Has Acted As Manager Of An Offering of Securities of (WMT)
Citi Has Received Compensation for Investment Banking from (WMT)
(WMT) Has Been A Client Of Citi in the Past 12 Months
Citi Is Market Maker in Shares of (WMT)

For
Rich Repetto
Sandler O'Neill Expects To Receive Compensation from (CME)
Sandler O'Neill Expects To Receive Compenation from (NYX)

For Brian Kelly
Kelly Owns (QCOM)
Kelly Owns (ORCL)


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