Both the Dow and S&P pared early gains on Wednesday with investors taking profits after a sharp move higher just one day ago.
However the Fast Money desk was more concerned by the negative action in the Nasdaq, which was led lower by cloud computing stocks after Equinix lowered its full year revenue outlook.
Equinix as well as its rivals have seen an incredible run up over the past few months on the cloud computing craze and on Wednesday Rackspace , Savvis , and Terremark were just a handful of the many names punished by tech investors.
Is the price action a warning sign of what's to come?
Instant Insights with the Fast Money traders
Investors were spooked after Equinix said churn was higher than expected and discounting was sharper than expected, explains CNBC’s Herb Greenberg. That’s what dragged down the entire space.
In other words, prices are being driven down and there's only so much these firms can do to compete for business, adds host Melissa Lee.
I have no opinion of where valuations in cloud stocks should be, adds veteran trader Gary Kaminsky. But the catalyst here was the bidding war that erupted for 3PAR. Investors who go into these stocks looking for the next takeover are typically late to the party.
I love these names and continue to love these names but I suspect we'll see valuations that were in the clouds come back to earth, adds Pete Najarian. I agree with Gary that investors were building in a sharp takeover premium and now realize they may not get it.