On Friday, it seemed traders on the floor had stopped asking if the market could rally and started asking just how much farther will stocks fall.
Pessimism swept across the Street, after The Nasdaq erased its gains for the year, and the Dow slipped below the psychologically important 12,000 level.
Looking at the S&P 500, the index was on track for a sixth straight week of losses. ”We’re in the middle of the worst losing streak since 2002,” says host Scott Wapner.
Selling was triggered by reports that China exports slowed and Brazil retail sales slipped unexpectedly. Considering most of the economic data has been weak lately, investors considered the new information as confirmation that the world was in the midst of a full blown global slowdown. “That’s the presumption (investors) read from all this,” says Pete Najarian.
What should you be watching? How should you position now?
Instant Insights with the Fast Money traders
Trader Steve Grasso thinks the market is trading on technicals and suggests a few key levels that he says every investor should be closely watching.
First he thinks how the S&P behaves around 1275 is important, that’s the Egypt bottom. If the market breaks below that level, Grasso says 1257 is the next key level – that’s flat on year. And after that he suggests watching 1228 – the 50-week average. “I think we’re going to be down there shortly, but nothing happens in one fell swoop,” he says.
If you’re looking for ideas, trader Patty Edwards suggests putting money to work in Exelon or the utilities . “Other than that I wouldn’t go too long.”
Steve Grasso agrees with her call. “If you look back at the sell-off from June 1st, the sector that got hit the least was utilities,” he says. “It profits as we move up the ladder and doesn’t hurt you as much as we move down the ladder.”