“I am short the market, I think we go lower from here,” he says on CNBC’s Fast Money Halftime Report.
Kelly is preparing for a 5-10% move to the downside, however he says it’s possible the correction becomes something more serious.
“It could be the start of something bigger,” he says.
"If Spain doesn’t get a bailout and there’s little resolution to Europe’s woes, then the market could be looking at something bigger."
But that's only one potential trigger. You can find out about the other two in the video above.
Posted by CNBC's Lee Brodie
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Trader disclosure: On August 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long WY; Brian Kelly is long SPY Puts; Brian Kelly is short SPY; Simon Baker is long AAPL; Simon Baker is long INTC; Simon Baker is long WMT; Simon Baker is long PBI; Michael Murphy is long WFC; Michael Murphy is long LNG; Michael Murphy is long HTZ
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