Bulls retired for week-end licking their wounds with Dow tumbling by triple digits again.
Investors ran for the exits after concerns that the latest jobs report wouldn’t live up to expectations proved to be well founded.
Although 431,000 jobs were created in May, most of those gains were due to temporary workers hired by the census. And to make matters worse the overall number fell short of Street expectations.
Meanwhile reports of another possible debt crisis – this time in Hungary added to the negative sentiment.
By the close the S&P 500 had fallen below 1,070, a level which had been considered support and just below the intra-day low the market reached during the "flash crash" on May 6 of 1065.
How much farther is the S&P going to fall?
Instant Insights with the Fast Money traders
The next key level to watch on the S&P is 1040, explains Guy Adami. If we break below that, we're likely at the start of something big. And the down whoosh could be as bad as the low 900’s.
The S&P 500 had been struggling with its 200-day moving average around 1105 and bulls were hoping the jobs reports would provide the catalyst for the market to break above that level, explains Joe Terranova. But it didn’t. I don’t see any other positive catalyst in the near-term. As a result, I think the trade is to get defensive with stocks like Disney, CVS and Best Buy.
In this kind of environment, I’m inclined to stay on the sidelines , says Karen Finerman. However, if I see value I’ll buy it. And right now there are a few select names I’m looking at including IBM, Hewlett Packard and Johnson & Johnson.
I’m watching the Vix, says Mike Khouw. The spike higher says investors are growing fearful as we approach the next earnings season.
What do you think? We want to know!
CORRECTION CASUALTY: COMMODITIES
The Fast Money desk is closely watching the action in commodities and resource names as the risk trade comes off.
Oil was among the day’s big losers with metals such as copper also tumbling, however nat gas names traded higher; in the same direction as the spot price of nat gas.
What’s going on?
I’m hearing that hedge funds are rotating out of oil and the metals and into nat gas which has underperformed, explains Joe Terranova. I think there’s more bang for the buck in nat gas.
I agree with Joe, says Mike Khouw. I like the nat gas space and I’d play it with a Chesapeake.
I think nat gas is the only play in the space, especially if China is slowing their growth and perhaps even stockpiling, warns Guy Adami. It’s a very dangerous time to get long commodities broadly.