Nervous investors hammered stocks on Monday sending the Dow within a stone’s throw of 10,000 yet again.
Concerns about the pace of the recovery ahead of Friday’s jobs report overshadowed data showing a rise in consumer spending and income.
The uncertainty weighed more on sectors associated with growth such as banks and consumer discretionary stocks.
Perhaps most worrisome, stocks closed on the lows of the day, although it’s also worth noting volume was the lightest it’s been all year.
What should you be watching now?
Instant Insights with the Fast Money traders
I’m watching the Bank ETF, says Pete Najarian. It hasn't been able to break above 15 and just seem to be pulling back and pulling back as you can see from the chart. The market can’t rally without financials. However, it’s worth noting that volume was very light.
I agree that the financials led us on the way up and the financials seem to be leading up on the way down, adds Guy Adami. That could be a 'tell.'
This week I’ll be looking at economic data such as ISM, the jobs report and China PMI, which are all due out, adds Joe Terranova. They could generate headwinds. However I also think there are tailwinds in the market. I’d look at long positions in utilities, metals, the ag trade and I’d pick spots in tech.
I'm very concerned, counters veteran trader Gary Kaminksy. If there's a bias in the market it's going to be to the downside. I've been talking to people in apparel, supply companies and other real goods businesses. And I've learned that they're not talking about a double dip - in some areas there's never been a recovery!
CHART OF THE DAY: GOLDMAN APPROACHING KEY LOW
The traders are closely watching the action in Goldman, which may be at a critical inflection point.
No doubt about it; Goldman isn’t trading well, muses Guy Adami. It leaves me scratching my head.
INTEL, CISCO FALL AS SHAREHOLDERS SHUN DEALS
Intel closed lower on Monday with investors punishing the stock on news the chipmaker inked a deal to buy Infineon's mobile unit.
Cisco didn’t get any love either, with this tech titan rumored to be interested in buying Skype.
What’s the trade?
As far as I'm concerned Intel’s acquisition acknowledges that something is wrong with their business model, speculates Joe Terranova. They want (less) exposure to the PC consumer. They’re transitioning their model. (Infineon’s radio chip is used by the iPhone 4.)
I agree that we’re looking at a paradigm change in the space, adds Brian Kelly. People may shift from more expensive PCs to less expensive tablets because they no longer have to store their info on a hard drive. Soon, they’ll be able to do it in the clouds.
In the space, I like F5 , Akamai and Riverbed Technology, adds Pete Najarian.
2ND DERIVATIVE: CLOUD BURST
After a sharp surge last week investors pounded 3Par rivals on Monday after bidding them higher in the wake of the HP / Dell bidding war.
Compellent (CML) -6%
Commvault (CVLT) -3%
Isilon (ISLN) -4%
Netezza (NZ) -3%
What’s your move?
In the space I like EMC, VMWare and Rackspace, says Brian Kelly. We’re looking at a paradigm change. No longer will people have to store everything on their hard drive. They’ll be able to do it in the clouds.
CALL OF THE DAY: JPMORGAN SAYS OIL GOING TO $65 BY OCTOBER
The traders are keeping a close eye on crude after analysts at JPMorgan Chase lowered their price forecast and urged clients to sell oil.
The price of oil is nearing August lows and will fall further to around $65 a barrel by October, the firm said.
How should you position?
Find out now! Click here to go to Is Oil About to Make a Sharp Move Lower?
ANALYZE THIS: BIG PHARMA GOING AFTER BIOTECH