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Down, Up, Down Up – Is the Next Big Move Lower?

Thursday, 11 Aug 2011 | 6:46 PM ET

The S&P shot higher on Thursday as bargain-hunting investors marched into the market and snapped up stocks they thought were just too cheap.

Investors came back with a vengeance - all of Tuesday's losses on the S&P were erased in only one session. However, the S&P remains down for the week.

Considering the sell-off on Monday, the rally on Tuesday, the sell-off on Wednesday and the bounce on Thursday – is the next big move lower?

Word on the Street
Dissecting the day's major business news, with the Fast Money traders.

How should you position now?

Trader Joe Terranova is a buyer. “I watch the flow of capital to determine when the wind is at my back,” he says, And Terranova thinks the winds are shifting.

“On Thursday, money came out of safe havens such as the Swiss franc, gold and the LQD which tracks corporate bonds.”

Terranova expects that money to flow into equities. He suggests playing best of breed names such as JPMorgan and American Express. "Those stocks shouldn't have been taken down," he says, suggesting they will be the first to rally.

Mike Khouw agrees with Terranova that money is beginning to rotate out of fixed income and into equities. Also he says, ”valuations have gotten strong enough and also the derivatives market suggests the better play is probably long."

Pete Najarian is a little more cautious. “Did gold sell-off enough?” he asks, suggesting not enough money came out of gold to buoy equities. Najarian tells us he wouldn’t be surprised to see another sharp move in the market like the ones we saw earlier in the week. “It’s now elevator up and elevator down,” he says.

Guy Adami is by far the most bearish. "I like bottoms as much as the next guy but I don't think the bottom is in this market by any stretch," he says.



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Trader disclosure: On Aug 11, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;



Terranova owns (XOM); Terranova owns (CVI); Terranova owns (CAT); Terranova owns (OXY); Terranova owns (AAPL); Terranova owns (DAR); Terranova owns (FCX); Terranova owns (CACI); Terranova owns (ARUN); Terranova owns (ORCL); Terranova owns (EMC); Terranova owns (NCR); Terranova owns (VMW); Terranova owns (IBM); Terranova owns (AMZN); Terranova owns (LULU); Terranova owns (LTD); Terranova owns (WFM); Terranova owns (JPM); Terranova owns (AXP); Terranova owns (FXA); Terranova owns (VRTS); Terranova owns (LQD); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman and Finerman’s firm own (AAPL); Finerman owns (BAC) and Finerman’s firm own (BAC) leaps; Finerman owns (JPM) and Finerman’s firm owns (JPM) stock and (JPM) leaps; Finerman's Firm Is Short (IWR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (XRT); Finerman's Firm Is Short (SPY); Finerman's Firm Is Long S&P 500 Puts; Finerman's Firm Is Long Russell 2000 Puts; Najarian owns (AAPL); Najarian owns (BAC) calls; Najarian owns (C); Najarian owns (F) bonds; Najarian owns (MS); Najarian owns (PFE); Najarian owns (BX); Najarian owns (UNP) calls; Najarian owns (GDX) calls; Najarian owns (GLD) calls; Najarian owns (ECA)


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 Building Materials Holdings
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
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 (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (RLI)
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 (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 & IRL PLC

For Mike Khouw
Cantor Fitzgerald is a market maker in (AAPL)
Cantor Fitzgerald is a market maker in (AMZN)
Cantor Fitzgerald is a market maker in (BAC)
Cantor Fitzgerald is a market maker in (CSCO)
Cantor Fitzgerald is a market maker in (C)
Cantor Fitzgerald is a market maker in (XLY)
Cantor Fitzgerald is a market maker in (GS)
Cantor Fitzgerald is a market maker in (GOOG)
Cantor Fitzgerald is a market maker in (JPM)
Cantor Fitzgerald is a market maker in (JNPR)
Cantor Fitzgerald is a market maker in (MS)
Cantor Fitzgerald is a market maker in (NFLX)
Cantor Fitzgerald is a market maker in (NVDA)
Cantor Fitzgerald is a market maker in (PFW)
Cantor Fitzgerald is a market maker in (QFX)

For Gregory Zuckerman
** No disclosures

For Gina Sanchez
** No disclosures




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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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