Financial Sector ‘Tell’

Fast Money Portfolio
Fast Money Portfolio

On Thursday investors were scrambling to determine just how serious the ripple might be after JP Morgan blind-sided the Street.

The bank said it may be facing legal losses that could total more than $4 billion with trading losses totaling $800 million in the second quarter.

Although CEO Jamie Dimon said, ‘just because we were stupid doesn’t mean everybody else was’ – immediately investors were wondering what developments meant for other banks.

According to the pros, one way to tell will be to watch the credit markets.

Dave Albrycht of Virtus Investment Partners tells us, “we’ll take a hard look at the CDS on Friday. But not just JPMorgan – all banks.”

“We’re going to evaluate and get our arms around it,” he says.

In other words, although it's safe to assume the spreads will increase, the degree to which they increase will be telling.

Whether they expand dramatically or only mildly, will be evaluated by pros - as clues to how concerned investors really are.

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Trader disclosure: On May 10, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long BAC; Joe Terranova is long SBUX; Joe Terranova is long JPM; Joe Terranova is long UPL; Joe Terranova is long CHKM; Joe Terranova is long HPQ; Joe Terranova is long LQD; Steven Grasso is long ASTM; Steven Grasso is long AVAV; Steven Grasso is long BA; Steven Grasso is long D; Steven Grasso is long FRO; Steven Grasso is long LNG; Steven Grasso is long MHY; Steven Grasso is long NUAN; Steven Grasso is long MO; Steven Grasso is long PFE; Steven Grasso is long PRST; Steven Grasso is long S; Steven Grasso is long XLU; Steven Grasso is long ZAZA

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