NEW YORK (TheStreet) -- The Shanghai Composite fell 8.5% on Monday, dragging the S&P 500 lower by 0.6%. The U.S. index is now down almost 3% over the past week and has investors thinking about a possible larger-scale correction.
It hasn't been pretty as the S&P 500 has declined for five straight days, Guy Adami, managing director of stockmonster.com, said on CNBC's "Fast Money" TV show. If the S&P 500 falls below 2,042, then a larger pullback could be in the cards because that has been the support level, he explained. The S&P closed Monday at 2,067.64.
Investors seem to be drawing the conclusion the global economy is slowing since commodity prices are sinking. This is incorrect, according to Tim Seymour, managing partner of Triogem Asset Management. The selloff in financials is concerning because the sector has been a strong leader for the bulls, he said.
Pete Najarian, co-founder of optionmonster.com and trademonster.com, added that many banks in the sector are vulnerable right now as the stocks are at the 50-day moving average.
Carter Braxton Worth, head of technical analysis as Cornerstone Macro, says the leading sectors -- financials, technology and health care -- seem to be losing steam, which is bad news for bulls.
As for the broader market, Worth says more stocks continue to make 52-week lows and trade below the 150-day moving average, despite the S&P 500 being relatively close to a new all-time high. This is also bad, especially as the current uptrend is starting to level out.
Regarding China, Karen Finerman, president of Metropolitan Capital Advisors, said investors need to keep an eye on the country's underlying economy, not just its stock market. She's not letting the overseas action shake her from her long U.S. stock positions.
The action in China has caused concern about Apple (AAPL) - Get Report and whether the tech company will continue to see such strong sales in the region. According to Brian Blair, managing director at Rosenblatt Securities, investors shouldn't worry just yet. iPhone sales are still going strong and there are no signs a slowdown in China. Blair has a buy rating and $140 price target on Apple.
The price action in Chinese stocks is certainly not helping companies based in China such as Baidu (BIDU) - Get Report. Shares are down 13% on the year and fell another 7% in after-hours trading following the company's earnings report.
Spending climbed, but that shouldn't be a surprise, Seymour said. He's long the stock from around $160, but said below $180 he might take some profits since that's an important level of support. It's a "very, very good company" with a great valuation, but it's macro situation with China is not good, he added.
Back in the U.S., social media stocks will begin reporting earrings this week.
Twitter (TWTR) - Get Report has a key level of support at $35, Adami said. Investors can stay long the stock so long as it stays above that level, with earnings on Tuesday. Facebook (FB) - Get Report has pulled back from its highs and investors can stay long into its Wednesday earnings report. LinkedIn (LNKD) has a high valuation and reports on Thursday, but if being forced to go long or short Adami says he'd choose the former.
Finerman argued that Twitter can trade below $35, especially with so many questions surrounding the current state of the company such as if it will be bought out and who the new CEO will be. She also expects good results from Facebook, but said it's too hard for her to buy the stock after such a big rally.
For their final trades, Seymour is buying Keurig Green Mountain (GMCR) and Najarian is a buyer of Quest Diagnostics (DGX) - Get Report. Finerman said to buy JPMorgan Chase (JPM) - Get Report and Adami is buying U.S. Steel (X) - Get Report.