Don’t Buy the Dip Just Yet: Market Pro

Market upside has been driven by massive global liquidity—now reversing to global tightening—de facto in the US through the end of QE2, proactively in China through increasing credit standards and rising rates. The once positive trend in U.S. economic indicators has decisively reversed, and other countries are experiencing a loss of momentum, most alarmingly, Germany, resulting from their nexus to the sovereign debt issues throughout Europe.

Bernanke deserves some props: He was right. Despite the positive momentum in the economy, he harped on the tenuous recovery, and that is exactly what we have—a tenuous recovery. So while the world didn’t end this weekend, the eruption of Iceland's Grimsvotn volcano is perhaps a fitting symbol of the European economy and its sovereign debt issues.

Thus the question is: Can the blatant complacency that has kept market indices at levels near their highs continue in the face of a slowing global economy and until the uncertainty over European debt is eradicated? Although I do expect a resolution to this overhang, and a then knee-jerk standing ovation from the markets, the issues will not go away and austerity measures will lead to slower growth.

Although I advocate maintaining a long-term position in energy, I would avoid commodities near term, particularly hard commodities. I mentioned on "Fast Money" that the ABI came in below 50 for the first time in six months indicating a contraction in non-residential construction, symptomatic of a broader slowing.

This will affect copper usage as well as steel. The long-term secular case for commodity utilization is in force, but I believe China will hold off on large purchases until prices are lower. China is not a “just in time” consumer, having built stockpiles of raw materials; they are astute enough to realize that they are the delta in pricing.

I don’t see disaster in the markets, but the risks outweigh the rewards at this juncture, and the indices will churn lower. The Chicken Little fan club has postponed the end of the world until October. That timing seems right to me, so take the summer off.

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.

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Trader disclosure: On May 25, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss owns (DRR); Weiss owns (UUP); Weiss owns (MRK); Weiss owns (DE); Weiss owns (BRCM); Weiss owns (AKAM); Weiss owns (KO); Weiss owns (ETP); Weiss owns (NS); Weiss owns (COP); Weiss owns DVN); Weiss owns (HK); Weiss owns (NAV); Weiss owns (TEVA); Weiss owns (TWM); Weiss owns (QCOM); Weiss owns (MDRX); Weiss owns (VZ); Weiss owns (HAIN); Weiss owns (MSFT); Weiss is short (X); Weiss is short ( AKS); Weiss is short (SHAW)