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Critical Level Alert: Will Market Hold Or Break?

Stocks sank again on Tuesday with the sell-off accelerating into the close.

The Fast Money traders really didn't like how the session ended. In fact it left Pete Najarian more bearish than he's been in a long time.

What's concerning him so much?

Time and again the S&P has found support around 1120, Najarian says, and that’s right where we closed. If we break below we could be looking at serious problems.

And I’m seeing a slew of bearish indicators, Najarian adds. They follow:

- Copper is trading at $3, a critical level.

- Crude Oil is struggling with $70, also a critical level.

- Market bellwether Goldman Sachs is near its 52-week lows.

- Elevated put buying in the options world.

Across the board we may be about to break. But if we hold we have a shot at moving back up.

I think we have a little room on the S&P, adds Guy Adami. Rather than 1120 I think 1110 is the critical level. But a close below 1110 could send us to 1040. And if that doesn’t hold, we may be looking at 950. Buying dips won't work if we close below 1110.

1100 is the 200-day moving average on the S&P and holding that is critical, echoes Tim Seymour. Don’t forget Europe is a disaster right now, he adds. We may need to reevaluate valuations in this market broadly.

Europe is in trouble and it’s getting worse, echoes Dennis Gartman. I can’t imagine the euro does anything but goes lower. And I have to say after centuries of war and religious differences, I don’t know why anyone thought that France, Spain Germany and the other nations of Europe would embrace one another’s economies. Don’t forget the last time Europe had one currency, it was ruled by the Romans.

I do see some opportunities in this environment, counters Karen Finerman. I bought some PM and HPQ on Tuesday, she reveals. But, I'm nervous. Some of the stuff going on around the world is very reminiscent of what we saw right before Lehman collapsed.

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UNDER THE RADAR: VISA, MASTERCARD

Investors sold the credit card names largely due to ongoing concerns their businesses could be hurt by the proposed financial regulation bill.

What’s the trade?

Visa, Mastercard and American Express have all been punished, says Pete Najarian. Fin reg may be a short-term drag but long term the trend is away from paper and toward plastic. I’m a buyer on the dip.

I’m also a buyer, says Karen Finerman.

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MARKET BUZZKILL: CONSUMER

Consumer shares ended up being the big market buzz kill on Tuesday after better than expected results from TJX and Home Depot failed to lift the sector.

What’s the trade?

I like Walmart , says Karen Finerman. It’s not the sexiest stock but at current valuations it’s attractive.

I think TJX is attractive.

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EAR TO THE WALL: FINANCIALS

Straight from the Skybridge SALT Conference in Las Vegas, veteran trader Gary Kaminksy tells the desk that he thinks the crackdown on banks could be even more harsh.

That’s based on conversations he’s having with the hedge fund community. What must you know?

Watch the video and find out now!



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Trader disclosure: On May 18, 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 (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (AAPL), (BAC), (EEM); Terranova Owns (SWN); Finerman's Firm Is Short (IJR), (MDY), (IWM), (SPY); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (JPM), (JPM) Call; Finerman Owns (JPM); Finerman's Firm Owns (KFT); Finerman's Firm Owns (SKS); Finerman's Firm And Finerman Own (TJX); Finerman's Firm Owns (WFC) Preferredl; Finerman's Firm Owns (WMT); Najarian Owns (AMD) Calls; Najarian Owns (C) Calls; Najarian Owns (HPQ), Is Long (HPQ) June Call, Is Short (HPQ) May Calls; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (V) Call Spread; Najarian Owns (AMD) calls; Najarian owns (HPQ), is short (HPQ) calls; Najarian Owns (VRSN) calls; Edwards Owns (VXX)

For Tim Seymour

Seygem Asset Management Is Short (EEM)

For Dennis Gartman
Funds Managed By Dennis Gartman Are Short (GS)
Funds Managed By Dennis Gartman Own (MMM)
Funds Managed By Dennis Gartman Are Short Gold
Funds Managed By Dennis Gartman Are Short British Pound Sterling
Funds Managed By Dennis Gartman Are Short Euros
Funds Managed By Dennis Gartman Are Short Yen
Funds Managed By Dennis Gartman Are Short Australian Dollars
Funds Managed By Dennis Gartman Are Long Canadian Dollars

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

For Patty Edwards
Edwards Owns (GLD) for clients
Edwards Owns (INTC) for clients
Edwards Owns (NVDA) for clients
Edwards Owns (HD) for clients
Edwards Owns (HPQ) for clients
Edwards Owns (DELL) for clients
Edwards Owns (MSFT for clients
Edwards Owns (AAPL) for clients
Edwards Owns (GOOG) for clients
Edwards Owns (VIX) for clients
Edwards Owns (SPY) for clients
Edwards Owns (QQQQ) for clients

For Vijay Rakesh
Sterne, Agee & Leach Is A Market Maker In (AAPL)
Sterne, Agee & Leach Has Managed Or Co-Managed An Offering Or Provided Investment Banking Services For (AAPL) In Past 12 Months
Sterne, Agee & Leach Has Security Accounts Open For (AAPL)
Sterne Agee Financial Services Has Clearing Agreements With (AAPL)
Rakesh owns (AAPL)
Sterne, Agee & Leach Or Affiliates Own 1% Or More Of (AAPL)


CNBC.com with wires

Symbol
Price
 
Change
%Change
S&P 500
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ALXN
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GS
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HD
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HPQ
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MA
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PM
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TJX
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V
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WMT
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MCD
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