'Fast Money' Recap: No-Man's Land

The markets sank Monday on lingering worries about the health of the financials.

The Dow Jones Industrial Average dropped 289.60, or 3.56%, to 7,841.73, while the S&P 500 lost 37.21, or 4.28%, to 832.29. The Nasdaq fell 64.29, or 3.88%, to 1,608.21.

Melissa Lee, the moderator of CNBC's "Fast Money" TV show, asked the panel whether the market is heading toward a dive or whether this was just profit-taking.

Guy Adami said the market is in sort of a "no-man's land." He said he expected the profit taking to begin at 900. Instead the S&P retreated past his 840 benchmark to 830, where he says he wants to take some time to reevaluate the situation.

Joe Terranova said the market was playing defense all day after remarks from White House economic adviser Larry Summers about the conversion of preferred stock in bank stocks to common equity. Still, he maintained this is not the end of the bear market rally, adding there is underlying support for the market.

Karen Finerman said the government talked itself into a corner with its handling of the bank stress tests and comments about converting preferred into common.

Pete Najarian expressed concerns for the volatility index which made a big move up toward 40.

Lee shifted the discussion to IBM (IBM), which was lower in after-hours trading after its sales came up short.

Still, Adami said he was impressed with Big Blue's report, saying the earnings were fine along with its EPS of $9.20 for 2009 and $10 to $11 for 2010. With a 12 to 12.5 multiple, he sees the stock moving to $112 to $120.