'Fast Money' Recap: Looking for Opportunities

The traders say with panic comes opportunity, but the markets do look pretty scary right now; financial stocks were a big buzzkill.
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NEW YORK (TheStreet) -- Last Friday's optimistic note on which trading ended was quickly forgotten with another bear day of trading on Monday, and an equities decline that accelerated as the day progressed.

The

Fast Money

crowd said with panic comes opportunity, but the markets do look pretty scary right now. The correction continues and there does not appear to be a big catalyst to take the markets higher in the immediate future.

The

Dow Jones Industrial Average

closed at its lowest level since a February 2009 low. The Dow lost 80 points in the last 15 minutes of the day on Monday. For the year, the Dow is now down more than 10%, and the

S&P 500

is down more than 11%.

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

3 Stocks I Saw onTV

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The major indexes have finished lower four out of the past five trading session.

The euro is down another 1.4%, back below $1.24 at the close of trading on Monday.

Karen Finerman

said that it doesn't matter what the news is right now, the market will read it as bearish and it's hard to get a lot of confidence as an investor.

Financial Stocks

Financial stocks were the big market buzzkill on Monday, with the

SPDR Financial

(XLF) - Get Report

down below its "Flash Crash" level, for a 3% decline on the day. The bank stocks dropped the most of any of the 24 sectors in the

S&P 500

on Monday.

Wells Fargo

(WFC) - Get Report

led the banks down, with a loss of 5% on Monday, after a downgrade from Goldman Sachs.

Bank of America

(BAC) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

were down 4%, and

Goldman Sachs

(GS) - Get Report

finished down 3%. The

Fast Money

crew said that famed bank analyst Meredith Whitney's bearish call on the banks from last week, saying she wouldn't own the financials in a million years, looks right again.

The

Fast Money

gang was looking for a catalyst for financials to go higher, and Karen Finerman said with at least a month likely before financial reform legislation in finalizes, uncertainty will weigh heavily on these stocks and it might take second-quarter earnings in July to move the bank stocks higher. Brian Kelly of Kanundrum Capital said that he is shorting

CME Group

(CME) - Get Report

right now as part of a bearish outlook on financial stocks.

Goldman Sachs is among the financial names that the

Fast Money

gang was keying in on, as Goldman Sachs shares went below the $140 mark, which had been a strong support point for the investment bank. Joe Najarian said that every time Goldman Sachs shares go below $140, it tends to recover quickly above that level, or go all the way down to $125, so Goldman shares are at a very important level to watch right now. Najarian said Goldman at $140 or above should be an outperformer with volatile trading through the summer to drive profits.

The decline in Goldman, after reporting solid first-quarter profits, has taken the stock down near book value, and investors will soon be buying Goldman shares at the level at which Warren Buffett was buying them, excluding the Buffett stock warrants beneath that level.

Tech Stocks

The

Fast Money

crew was extrapolating the question about Goldman Sachs to the entire market after another down day: At what level do investors buy back their favorite names?

Gary Kaminsky joined

Fast Money

to say that he is looking at the technology sector and names like

Intel

(INTC) - Get Report

, down 13% in the past month. The

Technology SPDR

(XLK) - Get Report

is down 7% this year, and that sets up technology to be a significant outperformer, if the capital markets stabilize. And that's a big "if".

Kaminsky said the markets are not functioning properly now, and for investors to not continue the trend of selling to raise cash, there has to be some positive capital markets action. It could be IPO pricing, a healthy round of secondary equity offerings, or health in the corporate bond markets. Any or all of those signs might indicate the market stability that will send some of the most beaten-down names higher. The crew quoted a telling statistic about the bond markets, with $183 billion April bond issues, but only $47 billion in May.

Tim Seymour agreed with Kaminsky, saying that technology may be the best example right now of a sector testing cheap valuations.

Guy Adami was pointing to

IBM

as the tech play. Adami mentioned recent long-term guidance from IBM, targeting $20 EPS by 2015. Currently, IBM EPS is $11.50. While it's a long-term EPS projection, if IBM is not overselling itself, a valuation of $121 in IBM would make the technology leader very cheap. Adami said IBM has a great balance sheet and recurring revenue stream, and it's starting to get interesting in terms of valuation, but still needs to go a little lower.

Pop Stocks

Tim Seymour was focused on the big oil names, leaving to the side

BP

(BP) - Get Report

. Seymour said BP has brought such concern on the sector that the big integrated oil companies, including

Conoco Philips

(COP) - Get Report

,

Royal Dutch Shell

(RDS.A)

and

Total

(TOT) - Get Report

, are stories that he loves in the current market.

Karen Finerman noted that

Citigroup

(C) - Get Report

was among the only financial names closing higher on Monday, and a big U.S. name on her watch list is

Johnson & Johnson

(JNJ) - Get Report

which is currently trading at a 12.5 times earnings multiple, a price-to-earnings ratio that JNJ has not seen in years.

Hedge fund manager Dennis Gartman of The Gartman Letter shared the bearish view of the

Fast Money

crew and said the situation in the Euro Zone is only getting worse. "Friday's rally failed badly and I'm hard pressed to find anything to take solace in. ... There is still more on the downside, with all bullish news shrugged off, and bearish news emphasized," Gartman said. The current macroeconomic unrest means that investors need to sell high beta stocks and focus on defensive names, like

Kellogg

(K) - Get Report

. Gartman said his biggest short right now is a maker of telephones "that we all carry in our pockets."

It wasn't shares of

Apple

(AAPL) - Get Report

that Gartman was shorting, but Apple came up as an important trading point of controversy.

Is Apple the safe tech call amid the current market madness? Morgan Stanley added Apple shares to its best ideas list on Monday, saying that earnings could reach $20 per share in 2011, and Apple shares closed up Monday nearly 2%. The

Fast Money

gang saw the Morgan Stanley call as a good time to short Apple, with Brian Kelly saying that Apple shares could be poised to head back down to $200. Joe Najarian did not agree with Kelly, citing the fact that Apple will have a new iPhone hitting the market and that usually sends Apple and

AT&T

(T) - Get Report

shares higher. Still, Najarian said the cautious way to play Apple right now is through options because the volatility has been higher than the historical norm for Apple shares lately.

Tim Seymour said that given the outlook for Apple, being short the name is more of a call on the market as opposed to a call on Apple as a company, and Kelly agreed, saying that he is shorting Apple now but likes the long-term story, and probably would be a buyer at $200.

Karen Finerman said another way to trade the current markets' unrest is through risk arbitrage opportunities in the mergers and acquisitions space. Finerman pointed investors to two deals, the

Alcon

(ACL)

acquisition of

Novartis

(NVS) - Get Report

, and the

Airgas

(ARG)

acquisition of

Air Products & Chemicals

(APD) - Get Report

. Finerman said these two deals topped her risk arb play lists as both the buyers had great balance sheets.

Hedge fund manager Whitney Tilson joined

Fast Money

to discuss the housing market, and Tilson is not a bull on the U.S. home sector or a quick recovery. Tilson said the housing sector is still on the verge of a double dip, even though the existing home sales data on Monday for April came in higher than expectations, up more than 7% for the month. Tilson remains short the U.S. homebuilders and short the

ishares U.S. Home Construction ETF

(ITB) - Get Report

.

"Housing is on a precipice and we don't know which way it will tip and the homebuilders are in trouble either way," Tilson said, adding, "the best hope for the housing market is to buy time." As a primary concern that isn't going away, Tilson pointed to the 8 million homes currently not able to make mortgage payments and uncertainty about the government's plans to help out these underwater home owners.

Jeremy Zirin, chief equity strategist at UBS Wealth Management, tried to look beyond the gloom of the world markets and said that the U.S. economic recovery is intact, and that makes consumer staples an overweight sector. Zirin countered claims that the consumer staples deserve to be left behind because of currency risk, citing the numbers relative to the S&P 500 exposure to Europe. Zirin noted that the S&P 500 is much more exposed to Europe than the consumer staples sector, which has a much higher emerging markets exposure. UBS is recommending that clients keep a balanced sector portfolio -- mixing defensive names that have come back as the markets have weakened, with consumer staples. UBS is bullish on food, beverage and tobacco plays.

There was some breaking news from the hedge fund world during the broadcast, with

Greenlight Capital

filing with the

Securities and Exchange Commission

notice that it had purchased a 5% stake, or a little over 3 million shares, in

NCR

(NCR) - Get Report

. NCR shares popped more than 6% in the afterhours sessions and will be a stock to watch on Tuesday morning.

The

Fast Money

verdict on the gold selloff from last week was that it's over. Gold finally posted a gain after four days selling off, and Dennis Gartman said that it's time to get back in gold, either through euro or pound trades, as owning gold in non-dollar terms reduces volatility.

-- Written by Eric Rosenbaum in New York

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

.

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