Though stocks slid Tuesday, "Fast Money" traders still found opportunity in a sluggish market.
The three major U.S. averages dipped more than 0.75 percent each, and the Dow Jones industrial average suffered its first triple-digit loss in almost a month. Trader Karen Finerman said she expected weakness due to the "remarkable" comeback stocks mounted from after a brutal start to the year.
But she warned against overreacting to the fall.
"I certainly wouldn't sell" at these levels, she said.
Finerman believes volatility, which has waned after spiking earlier this year, could return to the market. She said she would buy options in the CBOE Volatility Index, which measures market expectations for near-term volatility, for "protection." The VIX is down 15 percent this year, but jumped 9 percent on Tuesday.
Uncertainty this year has driven bond-buying, sending the U.S. 10-year Treasury note yield about 22 percent lower. Trader Guy Adami believes that trend will continue, pushing the iShares 20+ Year Treasury Bond ETF higher. The fund has climbed nearly 10 percent this year.
In the current environment, home improvement stocks could climb, trader Tim Seymour contended. He touted shares of Home Depot, which Adami also likes. The stock has climbed 1.8 percent this year.
Seymour also sees upside for Restoration Hardware but warned that it carries "a lot more risk" than Home Depot.
Adami argued defense stocks will continue to rise, pointing specifically to Lockheed Martin. Its stock has risen nearly 4 percent this year.
He also touted shares of Coca-Cola, which are up 8 percent this year.
Disclosures:
Tim Seymour
long AAPL, AVP, BAC, BBRY, DO, EDC, EWZ, F, FCX, GM, GOOGL, INTC, NKE, SINA, T, TWTR, VALE, VZ, XOM. Tim's firm is long BABA, BIDU, CLF, KO, MCD, MPEL, PEP, PF, SAVE, SBUX, VALE, WMT,YHOO, short HYG, IWM, AND WYNN
Pete Najarian
Long AAPL, AMZ, BAC, CYH, DAL, DOW, EGO, FIT, HAIN, HOG, KO, KSS, LC, LPX, MDLS, MET, MSFT, MXIM, NEM, POT, SCHW, SLW, TCK, UAL, WYNN, ZIOP, EWZ, GDX, SLV, COP, LVS, He is long calls AAPL,.BAC, BBRY, BMY, DIS, DISCA, GE, KMI, KMI-A, KO, LUX, MRK, PEP, PFE, SAVE, VIAB he is long puts CHK, DB, HAB, HES, PBR, RY, VLO SOLD CRM, NEM CALLS
Karen Finerman
Karen is long BAC, C, FL, GOOG, GOOGL, JPM, LYV, KORS, M, SEDG, SPY puts, URI. Her firm is long ANTM, AAPL, BAC, BOKF, C, C calls, GOOG, GOOGL, JPM, JPM calls, KORS, LYV, M, MOH, NRF, PLCE, SPY puts, URI, her firm is short IWM, MDY. Karen Finerman is on the board of GrafTech International.
Guy Adami
Guy Adami is long CELG, EXAS, GDX, INTC, Guy Adami's wife, Linda Snow, works at Merck.
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