'Fast Money' Recap: Bearish Mood

NEW YORK (

TheStreet

) -- The markets finished in the red at the end of the week on some discouraging reports on durable goods and new-home sales.

The

Dow Jones Industrial Average

dropped 42.25, or 0.44%, to 9665.19, while the

S&P 500

was down 6.40, or 0.61% to 1044.38. The

Nasdaq

fell 16.69, or 0.79%, to 2090.92.

Guy Adami said on

CNBC

's "Fast Money" TV show, the market action was not as bad he thought it would be. Still, he believes the market will move another leg lower next week going into October.

He said people will look back at the

Fed

's meeting earlier this week as the beginning of the market decline that he had been predicting for awhile.

Steve Grasso took issue with that point. He said that it shouldn't be a surprise to anyone that the Fed has an exit strategy. "Did anyone think the Fed was going to time this perfectly? No. It's not a huge shock. I don't think we should be selling the market on this," he said.

For a breakout of some stocks from a recent "Fast Money" TV show,check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

Karen Finerman also disagreed with Adami's bearish statements. She said today's market drop was reasonable considering the discouraging durable goods report, weak housing sales report and big drop in

Research In Motion

(RIMM)

.

Joe Terranova said the market faces two tests. Technically, the S&P will be tested at 1100. Fundamentally, the market will look to see risky assets will continue to move higher after the Fed takes off the training wheels. He said he thinks the ride on the bike will be steady after an initial wobbly period.

Grasso wondered whether the recent market rally was based on a recovery or whether the "funeral is off." He said investors are waiting for normalized earnings to return.

Melissa Lee, the moderator of the show, said the market turned today after

Goldman Sachs

(GS) - Get Report

slid below $180 in a big interday reversal. Adami said the reversal was "startling" and predicts the stock is heading lower to around $160.

Terranova said the pivotal date will be Oct. 14, when Goldman reports its earnings. Finerman said she doesn't have a position on Goldman, but she said she would be long in the stock, if pressed. She said she believes the market will trend higher by the end of the year and Goldman will participate.

Lee turned to a chart showing that the the

Financial Select Sector SPDR

(GS) - Get Report

could break below its 50-day moving average. She said that if that were to happen, the financials could be in serious trouble. Adami said he was concerned by the flattening of the yield curve and other worrisome news in the sector, including the announcement of another failed bank today.

Finerman said the yield curve isn't so much the issue as it is non-performing loans. If the banks can turn in a good non-performing number, bank stocks will head higher, she said.

Lee said the Nasdaq was today's worst performing sector, weighed down the big drop in Research In Motion over its disappointing earnings report. Terranova said the report was a "game changer." "I don't know whether it's a name you will continue to own," he said.

While other analysts were revising their price targets for RIM, Tavis McCourt, an analyst with Morgan Keegan, didn't deviate from his outperform rating. "I don't believe anything has changed," he said. "It's still growing 20% to 30% a year."

He said the decline in the average selling price of its products was modest and will be reversed in the fourth quarter after it launches two high-end products.

The show was interrupted for a speech by President Obama at the G-20 meeting in Pittsburgh and a question-and-answer session with reporters afterward.

Lee asked Terranova what he thought Obama's comments would have on the oil trade. He said there's every reason in the short term for oil to go higher with the weak dollar, Goldman Sachs setting a price target of $85 a barrel and the Iranian situation.

However, Terranova was worried because he didn't hear any comments about Israel and "what it is thinking." He said oil is susceptible to a super spike.

Still, he said oil "looks a little broken" and recommended trading in natural gas instead.

Greg Troccoli, the noted chartologist from Opalesque, said the market runs the risk of a short-term correction, adding October has usually "not been very kind to the equities markets." He said a 20% correction is healthy, noting the market has gotten a head of itself in recent weeks.

On the Prop Desk, Lee noted it was a big week for IPOs. Adami said it's a great sign for the IPO calendar to be back, and Terranova called the development "phenomenal for the credit and equities markets."

In the final trades, Grasso liked

General Electric

(GE) - Get Report

. Adami liked Research In Motion at $65. Finerman liked

Target

(TGT) - Get Report

and Terranova was long

Abbott Labs

(ABT) - Get Report

.

-- Written by David Tong in San Francisco

To watch replays of Cramer's video segments, visit the Mad Money page onCNBC

.

"Check out

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

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