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Beginning Of A Larger Sell-Off?

On Thursday the Dow posted its biggest intraday point drop ever - shedding almost 1000 points midday - before the selling subsided.

Bank of America was the biggest percentage loser on the Dow; all 30 components closed lower.

Fear gripped Wall Street, as investors worried that Europe’s debt crisis could ripple badly across the US.

Those jitters combined with a possible computer glitch led to one of the most volatile days in trading history. (Click here to read more about that glitch.)

On the S&P the sell-off was broad and deep with all 10 sectors ending between 2 to 4 percent, lower. The financial sector was the worst hit.

What must you know before you trade Friday?

There are fundamental problems in this market, says Guy Adami. We have a debt crisis in Europe, China tightening and a resource tax in Australia. There are a lot of negative catalysts right now. I’m concerned that this is the beginning of a larger sell-off, he adds.

I’d get small, says Dennis Gartman. I’d be equally spread between long and short positions. There’s nothing wrong with going to the sidelines right now.

I just can’t help but think acquisitions and IPOs are going to slow down dramatically in the wake of these events, says veteran trader Gary Kaminksy. 3 deals were pulled on Thursday and that was before the sell-off. That’s bearish.

Don’t forget that no matter what triggered the sell-off (whether it was concerns about weakness in Europe or if it was a computer mistake) technicians will chart the sell-off and it will act as a magnet lower, says Steve Grasso of Stuart Frankel. We went down to 1065 on Thursday before we bounced. That means technicians will be looking to test half of the move, which makes 1090-1100 a magnet lower.

I’m watching the Vix , says Pete Najarian. I would expect to see volatility stay above 25 and possibly test 40.




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Trader disclosure: On May 6, 2010, 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 (GS), (INTC), (BTU), (NUE), (MSFT), (AGU), (C); Najarian Owns (C) Calls; Najarian Owns (CAT); Najarian Owns (CLF) Call Spread; Najarian Owns (HPQ), Is Short (HPQ) Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PG) Calls; Najarian Owns (XOM) Call Spread; Grasso Owns (SDS), (NDAQ), (DYN), (LPX), (ASTM), (ABK), (BAC), (BGP), (C), (JPM), (NEM), (PRST), (PFE), (BA), (T), (CSCO); Finerman's Firm Is Short (IYR), (IWM), (MDY), (SPY); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman Owns (GS) Calls; Finerman's Firm Owns (IBM); Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (KFT); Finerman's Firm Owns (MCD); Finerman's Firm And Finerman Own (RIG), (RIG) Calls; Finerman's Firm Owns (TJX), (TGT), (WMT); Kinahan Is Short (SPY); Kinahan Is Short (XLF); Kinahan Is Long (KFT) Through Options; Terranova Is Long Gold; Terranova Owns (SWN), (PFE), (XCO); Stutland Is Long (XLF) Strangle, Is Short (XLF) Calls

For JoeTerranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Steve Grasso
Stuart Frankel And Its Partners Own (AMR)
Stuart Frankel And Its Partners Own (BAX)
Stuart Frankel And Its Partners Own (DYN)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (TRV)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)

For Brian Kelly
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Owns (TLT)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (GFI)
Kanundrum Capital Owns (AUY)
Kanundrum Capital Owns (LPS)
Kanundrum Capital Owns (CCI)
Kanundrum Capital Is Short (DE)
Kanundrum Capital Is Short (NUE)
Kanundrum Capital Is Short (XOM)
Kanundrum Capital Is Short (SU)
Kanundrum Capital Is Short (HES)
Kanundrum Capital Is Short (AA)
Kanundrum Capital Is Short (CLF)
Kanundrum Capital Is Short (IBM)
Kanundrum Capital Is Short (BCS)
Kanundrum Capital Is Short (DB)
Kanundrum Capital Is Short (MCO)

For Anthony Scaramucci
Scaramucci Owns (C), Skybridge Owns (C)

Late Additions:
Funds Managed By Dennis Gartman Are Short Euro
Funds Managed By Dennis Gartman Are Long Gold
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Pound
Kanundrum Capital Is Short (RSX)
Kanundrum Capital Is Short (NUE)
Kanundrum Capital Is Short (DE)
Kanundrum Capital Is Short (CLF)
Kelly Owns (FXE) Puts
Kelly Owns (FXB) Puts




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