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'The Whole Tape Is Vulnerable', Says Top Trader

Fast Money trader Guy Adami has been forecasting a sharp downturn for some time.

In fact, the Negotiator has been a voice of caution on the desk for a couple months. That’s not to say for the entire ride up he’s been bearish – he hasn’t.

If you watch the show regularly you know during the fall rally he often said, “The tape wants to go higher. Don’t stand in front of a moving train. But one day people are going to wake up.”

Well the alarm clock may be ringing.

Adami believes fundamentals don’t support current valuations at these levels. And he’s starting to see ‘tells’ that suggest the market is starting to crack.

Negative signs are manifesting in three areas:

1. Industrials
2. Currency
3. Financials

“CSX and railroads are down,” says Adami. “Up until now the rails have been crushing on their releases, but CSX didn’t crush. And FedEx gave lousy guidance going forward.”

(Dow Theory suggests that the DJIA can’t go higher without the transports.)

Looking at global barometers, “Freeport McMoRan stopped making higher highs and higher lows," he explains. "This stock is broken. And US Steel said business would be lousy going forward."

And ahead of the show, Adami told our producers the stronger dollar was also a cause to be bearish on stocks. (The stronger dollar drags down the price of commodities, making them more expensive for holders of other currencies.)

Ontop of that Adami doesn’t like the action in Goldman Sachs . As he’s said so many times ‘that’s the canary in the coal mine.'

When taken separately these influences aren't terribly worrisome; it's the confluence of events that Adami doesn't like.

What’s the bottom line? “I think the whole tape is vulnerable,” Adami concludes.

What do you think? We want to know!


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Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to fastmoney@cnbc.com.Trader disclosure: On January 26th, 2010, 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), (C), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (AAPL) Call Spread; Najarian Owns (CTXS) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PFE); Najarian Owns (XLF) Calls; Finerman's Firm Is Short (IJR), (MDY), (SPY), (UNG), (USO), (IWM); Finerman Owns (AAPL); Finerman's Firm Owns (BAC) Leap, (BAC); Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (KFT); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Owns (WMT); Terranova Owns (BAC), (JPM), (XOM), (MMM), (FCX), (EMC), (AAPL), (DELL), (MSFT), (QCOM); Terranova Is Short (CMA), (ESS), (CAL); Terranova Is Long Copper Backwardation Futures; Terranova Is Long March 2010 Copper, Is Short July 2010 Copper

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