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The Triple Threat: 3 Key Market 'Tells'

Big investors are watching 3 key factors to determine whether the recent sell-off was a bullish correction or the start of a terrible bear market.

And those three factors are the euro , China and the financials .

That’s because much of the downward pressure on stocks stems from the following:
- Concerns that European sovereign debt problems will morph into another global economic downturn
- Worries that China’s fiscal tightening could drag down demand for commodities such as oil
- Uncertainty surrounding financial regulation and how it will impact bank profits

”A breakout or breakdown in these triple threats to our economy may in fact signal whether the recent sell-off is just a correction or a new bear market,” writes Fast Money Executive Producer John Melloy in his daily post.

It’s a compelling read full of smart market insights and we strongly recommend you check it out.

> Click here for Euro, China, Banks Make Up Key Market Barometer

What's the trade?

Jeremy Zirin of UBS seems to be most focussed on what's happening in Europe as his foundation for a trading thesis.

He tells the Fast Money desk he thinks investors should be moderately overweight consumer staples because they're less exposed to Europe.

"Investors think the sector has a lot of currency risk. But if you look at the numbers it has only 10% exposure to Europe," he explains.

But it's not just an avoid Europe play. Zirin also anticipates growth in the sector.

"It has 20% exposure to emerging markets. And emerging markets are (still) a growth story."

*Find out what other sectors Zirin recommends. Watch the video now!

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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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