Wall Street's rally was short-lived as the markets returned to grim reality Monday.

The

Dow Jones Industrial Average

lost 81.80, or 0.9%, to 9,952.89, while the

S&P 500

fell 4.35, or 0.50%, to 927.45. The

Nasdaq

driopped 4.18, or 0.30%, to 1,628.03.

Dylan Ratigan, the moderator of

CNBC

's "Fast Money" TV show, noted the markets fell for the first time in five days.

Still, Guy Adami was optimistic, saying the S&P looks technically fine. Karen Finerman said today's market is not much different from a week ago. She said the economy is deteriorating further, and she's worried about a "bad" jobless number on Friday.

Joe Terranova agreed, saying people are going to sit back and wait in this "cautious investing environment." "You've got to get some conviction beyond Friday that we can stay above 8,900."

Ratigan said there appears to be an "obsession with risk and unknown variables for months to come." That means there's a lot more reason for investors to sit back and take limited risk as opposed to trying to jump back in, he said.

Jeff Macke said that line of thinking leads you to a trader's market, in which investors will be taking gains in companies that they wouldn't be expecting moves in.

Ratigan asked Terranova for his thoughts on crude oil, which was up for the third consecutive day. Terranova said today's rise was tied to the fact that U.S. government saying it is going to purchase 12 million barrels of oil on the open market.

Terranova said oil is not going to surge above $100 a barrel. Rather, he said, it's going to be one of tactical trading in which investors see a little bit of rally alternating with a little pullback.

Terranova said he didn't think the current Israeli incursion into Gaza as something investors should use as a reason to go long on oil. That's because the conflict is part of something that has been going on politically for three decades, he said.

On the other hand, he said there is a good fundamental reason to get behind natural gas as a result of Russia's quarrel with Ukraine over natural gas prices. "That's certainly a more tradable theme than oil," he said.

Ratigan asked the panel to comment on the dismal auto sales in December, with

General Motors

(GM) - Get Report

, showing a 31% drop and Chrysler a 53% drop. Terranova said people simply are not going to go out and make a "risky" purchase. Finerman said the auto stocks are headed lower because "the debt is telling you they're going under."

Ratigan then read a list of 2009 surprises from Byron Wien, of Pequot Capital Management. They include the S&P rising 30% to 1,200, gold heading up to $1,200, oil rising to $80 a barrel, a serious downward slide in the dollar and NY state threatening bankruptcy.

The forecasts drew skeptical comments from the panelists. Adami and Finerman had their doubts about gold heading up to $1,200, while Terranova questioned the slide in the greenback.

Gene Munster, an analyst from Piper Jaffray, appeared on the show to talk about

Apple

(AAPL) - Get Report

, which was up 5% today. Speaking from the MacWorld show in San Francisco, he said the company, for the first time, has been clear about the potential for risk after Steve Jobs attributed his weight loss problem to a hormone imbalance.

On the succession issue, he said the company has done a good job of getting a group of senior executives in front of investors and believes Tim Cook, who is currently running the company, is the strongest candidate to succeed Jobs.

As for the trade show, Munster mentioned the iMac and Mac Mini as the most talked-about products and expects an announcement on the iPhone Nano to come in the next two to six weeks. He also expects Jobs to make a big product announcement in that same time frame.

He said he is still positive on Apple because it offers "one of the biggest growth opportunities in the portable communications market --- the concept of a computer in your pocket." "People are under-estimating that," he said.

Ratigan asked Arthur Laffer, the noted supply-side economist, to comment on reports of Obama's stimulus plan, including a proposal for a huge tax cut for individuals and businesses.

Laffer said there has to be tax rate reductions for tax cuts to be meaningful. He also did not see much of a stimulus in Obama's proposed tax rebates for previous taxes paid.

He said the stimulus package is going to hurt the economy because it will result in a higher tax burden for the populace.

If he had control of the stimulus package, he said he would initiate an income tax holiday for six months. "Can you imagine the boom we would have in that six-month period?"

Ratigan brought in Mick Huckman, a CNBC reporter, to talk about the prospects for biopharma stocks in 2009. Huckman said the report today of a deal by

Endo Pharma

(ENDP) - Get Report

to buy

Indevus Pharma

(IDEV) - Get Report

for something in the range of $4.50 a share to $7.50 a share is a harbinger of what could be a record year for mergers and acquisitions and partnership deals in biopharma.

He said it's happening because large biopharmas are facing patent expirations with little in the pipeline to fill the hole. Meanwhile, small biopharmas are running short of cash.

Finerman agreed with the theory but didn't know which ones were the best merger opportunities.

Huckman ticked off some names like

Gilead Sciences

(GILD) - Get Report

and

Onyx Pharmaceuticals

(ONXX)

.

He also said to look out for a company called

Orexigen Therapeutics

(OREX)

, which, he said, is coming out this week or next with the first data on late-stage results of a weight-loss drug.

Ratigan talked with chartist Carter Worth, from Oppenheimer, to get his take on the new year. Worth said he expects the S&P to trade in a 30% range for the year. In this kind of market, he said investors will be selling into rallies and buying stocks that are being sold off.

In the final trades, Macke said he's selling shipper names. Adami was up for a trade in

Tyson Foods

(TSN) - Get Report

. Finerman was long on

Genentech

( DNA). And Terranova said he would buy

McDonalds

(MCD) - Get Report

and sell

Sears

(SHLD)

"Check out

"'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.