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NEW YORK (

TheStreet

) -- China's shaky stock market reverberated through the U.S. markets Monday.

The

Dow Jones Industrial Average

dropped 47.92, or 0.50%, to 9496.28, and the

S&P 500

fell 8.31, or 0.81%, to 1020.62. The

Nasdaq

sank 19.71, or 0.97%, to 2009.06.

Guy Adami said on

CNBC

's "Fast Money" TV show that today's sell-off confirmed China's influence on the U.S. markets. Joe Terranova said the onus will be on the bulls to turn things around. He alluded to a series of reports, including one from the Institute for Supply Management and the unemployment report, that could deliver the upward push.

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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Pete Najarian said what was striking was the lack of commitment either way by traders in today's market action. "We're still waiting for the next leg of leadership."

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Karen Finerman didn't put much stock into today's action, noting that the first week of September is a historically slow period, with a lot of people out.

She said some stocks, especially specialty retail stocks, are still overpriced. Adami agreed, noting

J. Crew

(JCG)

as a classic short-squeeze stock, up 270% from its March low. "It doesn't make sense. I don't care how many T-shirts it's selling to 19-year-old guys. It doesn't make sense," he said.

Melissa Lee, the moderator of the show, said the decline in China's market sent oil down below $70 a barrel as well as other commodities. Terranova said it's time to have less exposure to commodities in view of what is happening in China.

Najarian said it's definitely a trader's market. He said investors should take the opportunity to pick up stocks like

Peabody Energy

(BTU) - Get Peabody Energy Corporation Report

and

Freeport McMoRan

(FCX) - Get Freeport-McMoRan, Inc. Report

on pullbacks. Adami, though, warned investors not buy on dips because he feels these stocks are heading lower.

Shifting to the financials, Lee said

Morgan Stanley

(MS) - Get Morgan Stanley Report

helped weigh down the sector after Bank of America-Merrill Lynch cut their rating of the investment bank to neutral, partially on the threat coming from the shift to retail brokerages from institutional brokers.

Najarian said online trading firms like

Charles Schwab

(SCHW) - Get Charles Schwab Corporation Report

and

Ameritrade

(AMTD) - Get TD Ameritrade Holding Corporation Report

have been on fire.

Lee asked the panel whether the rush to pick up trash financials is coming to a close. Finerman said she stays away from a stock like

AIG

(AIG) - Get American International Group, Inc. Report

because of its volatility and difficulty in getting a handle on its fundamentals.

Lee shifted to the $4 billion acquisition by

Disney

(DIS) - Get Walt Disney Company Report

of

Marvel Entertainment

(MVL)

. Terranova said the deal will provide 5,000 cartoon characters, attract the "teenage boy crowd," and boost the Disney Channel.

Adami said he he liked

Dreamworks

(DWK)

even though it's at a 52-week high. He said he hates buying anything high, but he said this is a name worth owning.

Moving to pharma stocks, Najarian said most of them have P/E ratios that look cheap and attractive dividend yields. He especially liked

Astrazeneca

(AZN) - Get Astrazeneca PLC Sponsored ADR Report

, with 104 drugs in its pipeline and plenty of upside. Adami said

Johnson & Johnson

(JNJ) - Get Johnson & Johnson Report

deserves a higher valuation.

Is it time to play defense? Jon Najarian doesn't think so. He said he doesn't believe the market is heading for a correction when

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. Report

is up on a down tape. He said Goldman is the "canary in the coal mine."

He also debunked the idea that China is leading the U.S.markets. He said China is still up 11.5% for the year after a 22% selloff, and he noted that the mature markets are down on average 17% year over year.

Lee took the other side of the debate, arguing that Goldman doesn't make for a good candidate for a canary because the government has done everything it could to help it succeed.

Lee shifted the topic to M&A activity. Adami noted two potential merger candidates:

Lazard

(LAZ) - Get Lazard Ltd Class A Report

and

Greenhill

(GHL) - Get Greenhill & Co., Inc. Report

. Finerman added

Pride

(PDE)

as another potential takeover target.

FBR Capital senior analyst Craig Berger gave an optimistic prognosis for tech in the fall. He said the tech channel is showing "all-time lean inventories," a downstream shortage and price hikes on very cheap capacitors and other cheap management chips. He said

Marvell Technology

(MRVL) - Get Marvell Technology, Inc. Report

has a very attractive valuation at 13.5 times pro-forma earnings.

Terranova said investors should carefully watch tomorrow's number from the Institute for Supply Management. He said they should be looking for a number north of 50. He said that's a level industrial names will "perform best." He said, however, anything below 50 could set up for a disappointment.

Greg Troccoli, Opalesque's director of technical research, said the market has reached a critical juncture, adding it will be necessary to wait a couple of weeks to see if the U.S. markets follow China's lead downward.

He said the Shanghai Composite Index, which was down 6.7% today, and the S&P have followed each other 45% of the time between 2002 and 2007 and 80% of the time between 2008 and the present.

David Snow, CEO of

Medco Health

(MHS)

talked about the impact of Obama's health care plans on his company.

He said no one knows what that plan will finally look like. However, he said he believes something meaningful will get done. He believes the plan will provide a pathway for biogenerics, which is "fantastic for us," and some coverage for the uninsured.

In the final trades, Terranova said he was getting out of his short position in

Essex Property

(ESS) - Get Essex Property Trust, Inc. Report

. Adami said he liked Medco Health, and Najarian said he was for

Watson

(WPI)

.

-- Written by David Tong in San Francisco

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