Pro Trading Strategies As Market Faces Cruel Summer

On Monday, pro traders were again wondering if it was going to be a cruel summer for the stock market.

The S&P tumbled with investors having a hard time finding any reason to hit the buy button.

From the floor of the New York Stock Exchange, trader Steve Grasso, director of institutional sales trading at Stuart Frankel, says as he talks with colleagues he finds little enthusiasm for stocks. “Right now it’s hard to find a reason to be bullish."

Largely, the market is again spooked by developments in Europe.

Spain formally requested euro zone rescue loans for up to 100 billion euros ($125 billion) to recapitalize its banks, saying the final amount of assistance would be set at a later stage. Some market economists say it is merely a prelude to a full bailout for Spain.

Meanwhile, billionaire investor George Soros added to the market’s skittish tone when he said in an FT editorial that Germany’s ongoing reluctance to support a banking union and stimulus measures is in the way of a solution to Europe’s debt crisis.


MUST SEE: The Top Secrets of Pro Traders


“This threatens to turn the June (28) summit into a fiasco which may well prove fatal because it will leave the rest of the euro zone without a strong enough firewall to protect it against the possibility of a Greek exit,” Soros wrote.

With headwinds threatening to make it a cruel summer on Wall Street here’s how the Fast Money pros recommend trading.

Strategy Session with the Fast Money traders

Trader Steve Grasso tells us he'll be watching how the market behaves if and when it tests 1300. He thinks if the market breaks below that level, it’s very likely the market trades near flat on year which is 1257.

Trader Josh Brown agrees. Brown, who is author of The Reformed Broker blog, cautions retail investors not to get caught in value traps because individual stocks look like they’re too cheap. “None of the trends are your friends, right now," he says.

Trader Joe Terranova, chief market strategist for Virtus, agrees that investors have to hedge their bets. However, he also says, earnings could be a bullish catalyst when earnings season begins in about 2 weeks. “1296 is the 200-day – lean against that,” he says.

If you must put money to work in the near-term, Terranova recommends dividend paying blue chips such as IBM and MCD. "They aren’t down as much as the market broadly," he says.

“It’s ok to nibble on things you like,” adds Brown, “Things won’t always be so terrible. But I wouldn’t be fully invested.”

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Posted by CNBC's Lee Brodie

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Trader disclosure: On June 25, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova is long VRTS; Terranova is long MCD; Terranova is long PNC; Terranova is long USB; Terranova is long TCBI; Terranova is long SBUX; Terranova is long WMB; Terranova is long SJM; Terranova is long UPL; Terranova is long WFM; Terranova is long AAPL; Terranova is long EMC; Terranova is long NXPI; Terranova is long LPX; Terranova is long SNDK; Terranova is long IBM; Terranova is long CNX; Terranova is long HYG; Terranova is short Mini S&P Futures September; Terranova is short Mini Russell Futures September; Najarian short (PBI); Najarian has long call spreads FB; Najarian has long call spreads MMR; Najarian has long call spreads ARNA; Najarian has long call spreads CF; Najarian has long call spreads POT; Najarian is long DDMG; Najarian is long COGX; Najarian is long CBOE; Najarian is long CME

For Steve Grasso
Stuart Frankel is long CUBA
Stuart Frankel is long GERN
Stuart Frankel is long HPQ
Stuart Frankel is long HSPO
Stuart Frankel is long MU
Stuart Frankel is long NYX
Stuart Frankel is long PRST
Stuart Frankel is long VVUS
Stuart Frankel is long XRX
Stuart Frankel is long ZNGA
Stuart Frankel is long APC
Stuart Frankel is long BAX
Stuart Frankel is long DVN
Stuart Frankel is long ESV
Stuart Frankel is long TBT
Stuart Frankel is short USG

For Jim Iuorio
Iuorio is short MS

For Brian Kelly
Kelly is short S&P futures

For John Rutledge
Rutledge is long FCX
Rutledge is long BHP
Rutledge is long RIO}
Rutledge is long CAT

For Toni Sacconaghi
Bernstein makes a market in shares of Apple
Mit Shah maintains a long position in Apple

For Kris Jenner
Jenner is long UNH
Jenner is long AGP
Jenner is long ALXN

For Colin Sebastian
Robert W. Baird & Co. Incorporated makes a market in the securities of ZNGA.
Robert W. Baird & Co. Incorporated and/or its affiliates expect to receive or intend to seek investment banking related compensation from the company or companies mentioned in this report within the next three months

For Yair Reiner
Oppenheimer & Co. Inc. makes a market in the securities of BA. with wires.