The Dow slipped below the psychologically important 10,000 level on Wednesday after the market took a turn for the worse in the last half-hour of the session, causing indexes to finish at their lows of the day.
Negative sentiment was triggered by comments from widely followed analyst Dick Bove who cut his view of Wells Fargo saying loan losses were mounting.
Ironically Wells as well as Morgan Stanley and U.S. Bancorp were among the financials behind the market’s strength earlier in the session – after they posted quarterly earnings above Wall Street's forecasts.
It just shows you how susceptible we are to bad news right now, muses Stephen Massocca of Wedbush Morgan. We've got such an extended stock market that a feather of news is enough to cascade it down almost 100 points.
What’s the trade?
I’m concerned by what Dick Bove says, muses Guy Adami. I think Wells goes to $25 and I’d play it from the short side. And I'm also concerned by the market's sharp turn lower late day.
I think the selloff was technical, adds Joe Terranova. What I’m watching now is the dollar . If the sell-off was triggered by fundamental fear and not technicals we should see a flight to quality and the dollar will rally. If we see that happen, then there will probably be more downside to come.
I also think the sell off was technical, muses Tim Seymour. I think volatility was cheap and the machines were in charge. I don’t expect to walk in Thursday morning to a sell-off.
CONSUMER SHARES HIT BY HIGH OIL
U.S. crude oil futures ended on Wednesday above $81 a barrel, the highest in a year, lifted by government data showing an unexpectedly large drawdown in gasoline stockpiles last week.
Meanwhile, shares of Walmart , Home Depot and other consumer names closed lower with investors fearing that higher oil prices will hurt an already struggling consumer.
What’s the trade?
Oil above $80 is a problem, adds Pete Najarian. Consumers may have no idea what’s happening with prices at the grocery store but almost every consumer can tell you what gas prices are doing. Everyday they drive by filling stations and see the price of gas tick higher and it impacts their psychology.
And oil didn’t budge when the market turned lower, adds Joe Terranova. This could be a problem for the rally going forward.
Looking at energy, if you’re in Apache it’s time to get out, counsels Guy Adami.
TOPPING THE TAPE: APPLE HITS NEW ALL-TIME HIGH
Shares of Apple hit a new all-time high on Wednesday after UBS raised its price target on the stock to $280. Meanwhile Yahoo! closed with gains after the Internet company beat profit and sales expectations – they also said advertising showed signs of life last quarter
Should you stick with tech this earnings season?
With Apple I’d still take a shot on the short side, says Guy Adami. If the market is reversing Apple should go with it.
GOV'T ORDERS DEEP STREET PAY CUTS
According to published reports, the Obama administration plans to order companies that received huge government bailouts last year to sharply cut the compensation of their highest paid executives.
The seven companies that received the most assistance will have to cut the annual salaries of their 25 highest-paid executive by an average of about 90 percent from last year.
BIG BEAR ROARS
The last time market guru and U.S. Senate cadidate Peter Schiff spoke with Fast Money he was bearish on the recovery to say the least.
You might remember on October 5th he said, "The US economy is not recovering from anything. It's getting sicker. It's not going to be a "U" or a "W" - there is no letter to describe it because there is no recovery. But there is a lot of inflation. You talk about the market. The market is rising because of inflation - nothing else."
Wait until you hear what he tells the traders now! Watch the video and see for yourself.
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Trader disclosure: On October 21st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (DIG), (MSFT), (AAPL), (BAC), (EWZ), (INTC); Najarian Owns (DE) Call Spread; Najarian Owns (STX) Call Spread; Najarian Owns (XLF) Call Spread; Najarian Owns (YHOO), (YHOO) Puts; Terranova Owns December Crude Oil Futures
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