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Dennis Gartman: Sell-Off to Get Worse

Monday, 6 Jun 2011 | 6:38 PM ET

Again on Monday chatter on the floor had everything to do with the market’s next big move and whether stocks were on the brink of a major correction.

The S&P 500 sunk to more than a two-month low and closed below the psychologically important 1300 level for the first time since March.

Sectors most closely associated with the economic recovery, such as Materials , Energy and the Financials all took a hit, with shares of Bank of America hitting its lowest level since May 2009.

As stocks have continued to fall, buying support has dried up, sending the S&P 500 through a series of technical support levels.

What happens now? How should you position?

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Strategic investor Dennis Gartman is concerned. In a live interview on CNBC’s Fast Money he says, “I think the sell-off gets worse.”

Gartman considers the recent market action is pretty bearish. “I had been hoping we’d get a rally (Monday) that I could sell into but it didn’t come,” he says. That’s disappointing because since last July on Monday the stock market has typically made gains. “When we get a Monday sells-off that’s atypical,” Gartman says.

Is a Market Correction Ahead?
Insight on what's in-store for the markets, with Dennis Gartman, The Gartman Letter, and the Fast Money traders.

Considering the market weakness and the string of negative economic data that's come out recently, “I think we’re looking at lower prices and a correction that could get reasonably more serious,” Gartman says.

When asked how serious, he replies “Another 5-10% to the downside. Let’s just say the trend is down and over the course of the next several weeks we’re probably going to be lower.”

Guy Adami holds the same opinion. He’s been closely watching the action in financials as his market ‘tell’. “The financials have been trying to tell us something for a while,” he says. Either banks stocks have lagged gains in the S&P or banks are leading the market lower. Adami thinks it’s the latter. “It’s the S&P that’s starting to catch-up.”

Trader Stephen Weiss is also looking for further weakness. “We’ve seen a major decline in the economic indicators yet since the beginning of the year S&P estimates have gone up,” he says. "Up 8% since January 1. There's a disconnect the market has to adjust to and it's not yet priced into stocks. I think the S&P goes a lot lower, not just a little."

Pete Najarian is relatively more bullish. “I’m not so sure we’re heading for a correction.” He says the weakness in Monday’s market was largely generated by moves in Apple into and - in the wake of - the iCloud debut. Typically Apple stock climbs into a product launch and then sells off. In other words, Najarian thinks some of selling pressure on Monday was nothing more than traders gaming Apple in the short-term.

Trader Joe Terranova says he’s anticipating a slowdown but not meltdown. “I’d stay defensive,” he says. “Health care works, McDonald’s works, Pepsi works,” he says.




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Trader disclosure: On June 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss owns (TWM); Weiss owns (SDS); Weiss owns (JPM); Weiss owns (QCOM); Weiss owns (COP); Weiss owns (DVN); Weiss owns (HK); Weiss owns (AKAM); Weiss owns (BRCM); Weiss owns (HBAN); Weiss is short (SHAW); Weiss is short (SLR); Weiss is short (SWLT); Weiss is short (X); Najarian Owns (ACI); Najarian Owns (AAPL); Najarian Owns (GE); Najarian Owns (C); Najarian Owns (MS); Najarian Owns (MSFT); Adami owns (AGU); Adami owns (C); Adami owns (INTC); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Terranova owns (XOM); Terranova owns (KSS); Terranova owns (CVI); Terranova owns (OXY); Terranova owns (TM); Terranova owns (BJ); Terranova owns (DIS); Terranova owns (PFE); Terranova owns (V); Terranova owns (HPQ); Terranova owns (FLX); Terranova owns (JPM); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (VRTS); Terranova is short (DELL)

Brian Kelly
Accounts Managed by Brian Kelly Capital owns (GLD)
Accounts Managed by Brian Kelly Capital owns (SLV)
Accounts Managed by Brian Kelly Capital owns (TLT) calls
Accounts Managed by Brian Kelly Capital owns Austrialian dollar
Accounts Managed by Brian Kelly Capital owns new zealand dollar
Accounts Managed by Brian Kelly Capital owns hong kong dollar
Accounts Managed by Brian Kelly Capital owns (IWM) puts
Accounts Managed by Brian Kelly Capital owns (USO) puts

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSWI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & URL PLC
Virtus Investment Partners Owns More Than 1% Of (DRYS)

Amelia Bourdeaux
**No Disclosures

Dan Nathan
** No Disclosures on (WYNN)

James Altucher
**No Disclosures



CNBC.com and wires

  Price   Change %Change
S&P 500
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BAC
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PEP
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SPDR MAT SEL
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SPDR NRG SEL
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SPDR FIN SEL
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XLV
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AAPL
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MCD
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