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The Nasdaq has been a major laggard this week, dropping 3 percent as the S&P 500 fell less than 1 percent and the Dow Jones industrial average has been nearly flat. And at this point, David Seaburg, the head of equity sales trading at Cowen & Co., says he doesn't know just what will end the selling.
"We are definitely seeing people sell a lot of names here. It is institutional selling on the desk," Seasburg said on Thursday's episode of "Futures Now." "I don't know who the incremental buyer is going to be when things really do start to pick up again."
The problem started when investors began to flee from high-beta momentum stocks.
"You're seeing a lot of the bigger high-beta names really being pushed down," Seaburg said. "We've seen a rotation out of the high-beta names into the high-value names, and it's been a clear rotation on our desk."
Then the results and guidance from Accenture, a major consulting and IT company, changed the outlook for larger tech companies. While the earnings results were weak, Accenture increased guidance, which some saw as a warning sign.
Bill Fleckenstein says that stock valuations have risen to absurd levels on the back of low interest rates. But though he remains staunchly bearish on equities, he still believes that it's not yet time to get short.
Valuations on certain tech stocks are "ridiculous—it's just plain ridiculous," Fleckenstein said on Tuesday's episode of "Futures Now." "But that doesn't really matter. Overvaluation, no matter how gargantuan, does not make stocks go down."
"When you get to a place where groups of securities can get wildly overvalued, usually that continues until they exhaust themselves, or until some monetary phenomenon upsets the apple cart," the noted short seller continued.
"But there can be no debate about absurd valuations. And you can't use zero percent interest rates as a justification, because the only reason rates are at zero percent is because of the same Fed that has caused the stock market to be infected with lunacy again."
Monday is shaping up to be a terrible day for the Nasdaq, as the Nasdaq composite slides 1.2 percent, and the more focused Nasdaq 100 index is down 1.0 percent, after bouncing back from its lows. What's notable is that a third of the decline in the Nasdaq 100 can be pegged on just three stocks that have been major tech darlings over the past year: Google, Facebook and Amazon.
"Ultimately, today, it's driven by the big names," said Rich Ilczyszyn, senior commodities broker at iiTrader. "Those big names took a shellacking on Friday, and you're seeing the carryover today."
Google dropped 2.1 percent on Monday, Facebook is down 4.2 percent and Amazon slid 2.5 percent.
Brian Stutland, of the Stutland Volatility Group, said a big article in Monday's Wall Street Journal about the problem click fraud poses for advertisers ("A 'Crisis' in Online Ads: One-Third of Traffic is Bogus") is likely weighing on Google as well as other companies in the space.
"That article has got a lot of people freaked out about these stocks," Stutland said. "Is the model still intact? Will there really be better revenue down the road?... So it's one piece of news that affects a number of names that are so much of the Nasdaq."
Peter Schiff has long held a dim view of the U.S. economy, and a cynical take on the bull market in equities. But even though he thinks stocks are a bad bet, Schiff would still never get short, because he thinks U.S. dollars are an even worse bet.
"Although I don't think there's a lot more upside in the stock market, I'm not looking for a collapse. But what I am looking for is a dollar collapse, so that even if the market continues to move higher, it's nominal highs only. It's not real highs adjusted for a loss of purchasing power in the dollar," Schiff said on Thursday's episode of "Futures Now."
The CEO of Euro Pacific Capital says that Fed stimulus will end up destroying the value of the dollar.
"As the Fed has to print more and more money to keep these asset bubbles inflated, it will diminish the value of the dollar," Schiff said.
So even though the Fed reduced QE once again on Wednesday, and Fed Chair Janet Yellen said that the fed funds rate could be increased sooner than many expect, Schiff doesn't believe the Fed will back away from stimulus.
In a passionate and charged debate on Thursday's episode of "Futures Now," Schiff and Dow presented divergent views on the Fed, government data and inflation. And interestingly, each of these disagreements came together to paint a picture of why they see gold going in different directions.
First of all, while Dow, author of the Behavioral Macro blog, sees gold going higher before it drops much lower, he says that the only way to gauge the action in gold is by looking at sentiment.
"The longer-term view on gold is still bearish," Dow said. "I think ultimately the economy will improve, rates will go higher, we're not going to get the inflation that a few people still fear, and that will mean that the second half of the gold bubble will melt. But it's hard to tell if we're at that point now, or if that point comes a few months out."
For Dow, "gold is the ultimate psychological trade. It's the ultimate sentiment-driven asset. It's not about fundamentals. There are no fundamentals. ... So you really have to go by how the sentiment is manifest in the market, and whether or not it's at an extreme."
Dow believes that sentiment is now neither especially bullish nor exceptionally bearish, making it difficult to predict gold's next move.
But Schiff's take is very different.
"I disagree with just about everything that Mark said with respect to his comments on sentiment," Schiff responded. "I still think the sentiment is quite negative on gold. Maybe not as negative as it was, but very few people believe in this rally ... so I think the sentiment still favors higher gold prices."
"The fundamentals have favored higher gold prices all along," Schiff continued. "It's just that most people don't understand how great [the fundamentals] are. They believe the myth of the U.S. recovery. They believe the Fed can actually unwind its balance sheet, that it can end QE, that it can raise interest rates and that the economy is going to keep on expanding. None of that is going to happen. It's all fantasy. "
But Dow says that Schiff's understanding of the Fed is fundamentally flawed.
"I think what people really haven't been understanding and are slowly coming around to is how the transmission of monetary policy actually works. A lot of people way back in 2009, 2010 started predicting inflation, an explosion of yields, a collapse in the dollar—a whole series of things that didn't manifest themselves. Now people are starting to learn that, wait a minute, printing money does not lead to inflation automatically," Dow said.
Gold is in the midst of its worst two-day stretch since December. But the Commodities King isn't ready to throw in the towel just yet.
"For the moment at least, the fear of war in Russia has been alleviated. But it's not eliminated. It's just been alleviated, and it was the fear of war that sent gold prices higher in the first place," Dennis Gartman said on Tuesday's edition of "Futures Now."
According to Gartman, publisher of The Gartman Letter, only one thing matters most to gold bugs now: Vladimir Putin. The greater the tension in Ukraine, the higher gold prices should go, Gartman said. As those pressures ease, gold should fall.
(Read more: Gold ends 1% lower as stocks rally on Putin speech)
"Any incursion by the Russians into mainland Ukraine, while unlikely, but remotely possible, would send gold soaring," Gartman said.
Of course, it's been quite the year for bullion. Gold is up 13.3 percent year-to-date, and if it can hold its gains, it would be its best first-quarter performance since 1985. Gold is also on track for its best overall quarter since the third quarter of 2007.
But despite the gains, Gartman still sees some near-term gold headwinds. "Central bank policy changes are not imminent, so those concerns are not driving gold; stocks are firmer, so that is weighing upon gold prices as money moves back from gold into equities. There is no sense of rising inflation and oil prices are at best steady, and that too weighs upon gold."
Still, in the long term Gartman remains a solid bull, noting that sentiment and the technical setup are still very constructive for gold.
"The chart is going from the lower left to the upper right," said Gartman. "And in my view, that should continue for some time, and you should buy."
Gold traded to a six-month high on Friday, as investors seeking shelter from global concerns surged into the yellow metal. At this point, gold traders will be closely watching the situation in Ukraine, where a referendum in Crimea set for Sunday could determine gold's next move.
"The news in Crimea is really driving this market now," said Mihir Dange, a gold options trader with Grafite Capital. "It's obviously one of the reasons why we've rallied like we have."
The rise in gold was extended on Friday morning, when gold futures rose by about $20 in three hours, hitting a morning high of $1,388 per troy ounce.
On Sunday, a succession referendum is set to be held in the Ukrainian republic of Crimea. The vote provides a choice between two options. One is joining the Russian Federation, and the other is having greater autonomy from Ukraine as outlined by the 1992 Crimean constitution. There is no third option to maintain the status quo.
The referendum is considered unconstitutional by the interim government in Ukraine. And the leaders of the Group of Seven nations, including the United States, have said that they will not recognize the election results, noting the intimidating presence of Russian troops. But the event could have a big impact on the gold trade regardless.
"If there is some kind of resolution passed, and Russia pulls back and there's a 'Kumbaya' moment, we're going to see gold sell off precipitously. I think there's only about a 10 percent chance of that happening, but as a trader, you have to be prepared for the long shot," said Rich Ilczyszyn of iiTrader.
After a positive open, stocks suffered a sharp intraday slide on Thursday that saw the Dow Jones industrial Average drop by more than 200 points. Now traders will have to closely watch the next few sessions to learn whether the five-year bull market might finally be coming to an end, according to UBS' director of floor operations, Art Cashin.
"I don't know about the bubble bursting, but we've done some serious technical damage," Cashin said on Thursday's episode of "Futures Now." "The next several days will be absolutely critical. If we see continued weakness, you will begin to hear people talking about having put the top in."
In explaining the weakness on Thursday, Cashin turned to rumors about the volatile situation in Ukraine.
"Early in the day, when we tried to rally, the S&P ran into some very strong resistance at 1,878, 1,874. We began to pull back very slightly from there. Then the rumor wires went hot with a lot of vague rumors about Ukraine and Crimea—rumors about statements that hostility was growing nearer, further rumor about possible shots being fired. Now, none of that was confirmed, but it was enough to spook the market," Cashin said.
On Sunday, a referendum vote is scheduled to be held in Crimea, in an apparent Russian attempt to make the Ukrainian republic a part of Russia. Cashin says the fast-moving situation could end up having a big impact on financial markets, especially if it leads to sanctions against Russia.
"If they have to wind up putting in heavy sanctions, Iranian-type sanctions on Russia—which I think is unlikely—that would have very negative financial implications around the world," Cashin said. "It would hurt global growth."
A significant and surprising build in crude inventories Wednesday added more pressure to oil prices, with West Texas Intermediate futures under the key $100 level.
The U.S. Energy Information Administration said that crude oil supplies for the week ended March 7 rose by 6.2 million barrels, nearly three times what the market was expecting. In its survey and analysis, Platts called for a 2.3 million barrel build.
Tim Evans, energy futures specialist at Citigroup, says this number came in well above even the high end of estimates, which were at 4 million barrels, and surpassed last year's report for the same week (3.6) and the five-year average (4.5).
Crude prices were already trading lower ahead of the report on investor concerns over China's economy and its growth potential, after a recent string of negative data from the world's second largest oil consumer.
Traders said an additional factor impacting price volatility was an announcement from the Department of Energy that it authorized a test drawdown and sale of up to 5 million barrels of sour crude oil from the Strategic Petroleum Reserve.
Traders speculated that the test could be a proactive step by the administration over geopolitical events in Russia and Ukraine.
However in a statement, the DOE said the release is part of routine evaluation and that recent dramatic increases in domestic crude oil production have resulted in significant changes to the system that need to be assessed.
"By law, the Department of Energy is required to conduct continual evaluation of the Strategic Petroleum Reserve system's drawdown and sales procedures," said DOE spokesman Bill Gibbons.
Five years into a bull market, Byron Wien doesn't see a top in sight. In fact, the vice chairman of Blackstone Advisory Partners says that there's still plenty of time to buy stocks.
"I think the market's going to flutter around a little bit here in the first half, but I think it's going to be relatively strong in the second half, and I think this year is going to end up surprising people favorably," Wien said on Tuesday's episode of "Futures Now."
(Read more: Stocks in 'euphoria mode': Strategist)
Wien says that stocks remain reasonably valued, and continued economic growth will boost corporate earnings.
GDP growth has been "hovering around 2 percent," but a look at "early encouraging signs" like railcar loadings and bank loans convinces Wien that "the economy could head toward 3 percent. That could be very good for earnings. I think earnings have been cut too far by analysts. I think earnings are going to be better than expected."
As the earnings outlook improves, "the market is going to go higher," Wien predicted.
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