Correction Continues After 1-Day Respite

The Dow closed in negative territory on Monday, after fresh worries about overseas banks rattled investor confidence.

The negative sentiment was generated by The Bank of Spain, which took over a small savings bank over the weekend.

In a different environment the developments wouldn’t be particularly noteworthy, but with Europe already fragile, investors feared it could be a sign of more trouble to come

The weakness rippled into the energysector with investors speculating economic troubles in Europe could drag down demand for oil .

How should you be positioned now?

Instant Insights with the Fast Money traders

1071 on the S&P is an important technical level and that’s where stocks are having trouble, says Guy Adami. I don't think bulls will have success propelling the market higher. Instead I expect the market will trend lower to 1040, he adds.

I’m watching the options market, explains Mike Khouw. I’m seeing unusually bearish action in the emerging markets ETF. It suggests at least one big investor is looking for a sharp decline.

If you’re looking for trades I like names that are big and defensive and should weather the storm, adds Karen Finerman.

It seems to me there’s at least one positive, says Tim Seymour. Inflation is coming out of the picture. But the issue going forward is leading multiples. Are stocks still cheap in the way we thought they were just a few weeks ago?

The market closed on its lows, reminds strategic investor Dennis Gartman. It just doesn’t look all that good for the bulls. I think there’s more to come on the downside.

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TOPPING THE TAPE: CITI

By the close Citi spacer was the only financial trading in the green, largely buoyed by an upgrade from Goldman Sachs.

Following are the reasons cited:
1. Consumer Credit Continues To Improve
2. Capital Markets Benefit from Volatility
3. Minimal Regulatory Impacts
Source: Goldman Sachs

What’s the trade?

In thefinancials , I’m watching the action in Wells Fargo, reveals Guy Adami. I can’t help but wonder if it’s going to $25.

For me, the financials are all about finreg, says Karen Finerman. I think once that happens and the market gets clarity it should be a positive catalyst. And I also think quarterly earnings will be pretty good in the sector but that’s not until July.

I’m short financials, counters Brian Kelly. I don’t like the environment for these stocks. I think the cost of capital is going higher. Also, I’m short the CME .

I'm watching Goldman Sachs, says Jon Najarian. It broke below $140, an important technical level, and that's worrisome. If it can trade above $140 in the short term, I love it. But it could well be on its way to $125.

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TOPPING THE TAPE: APPLE

Apple shares topped the tape on Monday with Morgan Stanley adding the name to it's "best ideas" list citing increased confidence that the company could see earnings of 20-dollars a share for 2011.

What’s the tech trade?

I’d short Apple, says Brian Kelly. I'd sell it around $248; I think it could go down to $200.

I wouldn't short Apple considering a new iPhone is expected, counters Jon Najarian.

* The OptionMonster does like an options play. Get all the details. Watch the video below!

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Trader disclosure: On May 24, 2010, 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 (BAC), (BX), (AAPL), (RTP) (F), (IBM); Karabell owns (GS), (C); Jon Najarian owns (AXL); Grasso Owns (BP), (NDAQ), (DYN), (LPX), (ASTM), (ABK), (BAC), (C), (JPM), (X); Adami Owns (C), (GS), (INTC), (MSFT), (NUE), BTU); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (ACL); Finerman's Firm Owns (ARG) Calls; Finerman's Firm Owns (BAC), (BAC) Calls; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (BP) Calls; Finerman Owns (GOOG); Finerman Owns (GS) Calls ; Finerman's Firm And Finerman Own (IBM); FInemran's Firm Owns (KFT); Finerman Owns (WFC) Preferred; Kelly owns (CAT) puts; Kelly owns (EMN) puts; Kelly owns (WYNN) puts; Kelly owns (EXPE) puts; Kelly owns (SPY) puts

For Mike Khouw
Cantor Fitzerald & Co. Is A Market Maker In (AAPL)
Cantor Fitzerald & Co. Is A Market Maker In (AMD)
Cantor Fitzerald & Co. Is A Market Maker In (BAC)
Cantor Fitzerald & Co. Is A Market Maker In (C)
Cantor Fitzerald & Co. Is A Market Maker In (DWA)
Cantor Fitzerald & Co. Is A Market Maker In (F)
Cantor Fitzerald & Co. Is A Market Maker In (FCX)
Cantor Fitzerald & Co. Is A Market Maker In (FNF)
Cantor Fitzerald & Co. Is A Market Maker In (GOOG)
Cantor Fitzerald & Co. Is A Market Maker In (GS)
Cantor Fitzerald & Co. Is A Market Maker In (IBM)
Cantor Fitzerald & Co. Is A Market Maker In (INTC)
Cantor Fitzerald & Co. Is A Market Maker In (JEF)
Cantor Fitzerald & Co. Is A Market Maker In (JPM)
Cantor Fitzerald & Co. Is A Market Maker In (MS)
Cantor Fitzerald & Co. Is A Market Maker In (QQQQ)
Cantor Fitzerald & Co. Is A Market Maker In (S)
Cantor Fitzerald & Co. Is A Market Maker In (SPY)
Cantor Fitzerald & Co. Is A Market Maker In (T)
Cantor Fitzerald & Co. Is A Market Maker In (WFC)
Cantor Fitzerald & Co. Is A Market Maker In (X)
Cantor Fitzerald & Co. Is A Market Maker In (XLF)
Cantor Fitzerald & Co. Is A Market Maker In (YHOO)

For Brian Kelly:
Kanundrum Capital Owns U.S. Dollars
Kanundrum Capital Owns (TLT)
Kanundrum Capital Owns (GLD)
Kanundrum Capital Owns (GFI)
Kanundrum Capital Owns (AUY)
Kanundrum Capital Is Short (EXPE)
Kanundrum Capital Is Short (CAT)
Kanundrum Capital Is Short (EMN)
Kanundrum Capital Is Short (XLK)
Kanundrum Capital Is Short (XLF)
Kanundrum Capital Is Short (WYNN)
Kanundrum Capital Is Short (CME)
Kanundrum Capital Is Short (FXI)
Kanundrum Capital Is Short (RSX)
Kanundrum Capital Is Short (USO)

For Dennis Gartman:
Funds Managed By Gartman Own (GLD)
Funds Managed By Gartman Are Short Sterling, Euros
Funds Managed By Dennis Gartman Own (AAPL)

For Whitney Tilson:
Funds Managed By Whitney Tilson Are Short (ITB)

For Steve Grasso:
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (TRV)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (AAPL)

For Mark Mahaney:
Employees Of Citigroup Own (GOOG), (YHOO)
(GOOG), (YHOO), (AMZN), (EBAY) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets
Citigroup Global Markets Or Affiliate record non-investment banking compensation from (GOOG), (YHOO), (AMZN), (EBAY) in past 12 months
Citigroup Global Markets And/or Affiliates has a significant financial interest in relation to (GOOG), (AMZN), (EBAY)
Citigroup Global Markets Or Affiliates owns 5% or more of (YHOO)
Citigroup Global Markets Is A Liquidity Provider In (GOOG), (EBAY)
Citigroup Global Markets or affiliates owns 1% or more of (YHOO)
Citigroup Global Markets or affiliates owns 1% or more of (AMZN)
Citigroup is a market maker in (GOOG)
Citigroup is a market maker in (YHOO)
Citigroup is a market maker in (EBAY)
Citigroup is a market maker in (AMZN)

Other Relevant Disclosures:
Finerman's Firm And Finerman Owned (JPM) On 4/12/10

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