'Fast Money' Recap: Stock Picking Gets Tough

NEW YORK ( TheStreet) -- The markets sank Tuesday over Greece's precarious future in the eurozone.

The Dow Jones Industrial Average slid 297.05, or 2.48%, to 11,657.96. The S&P 500 fell 35.02, or 2.79%, to 1218.28. The Nasdaq dropped 77.45, or 2.89%, to 2606.96.

Pete Najarian said on CNBC's "Fast Money" TV show that the price action was "brutal" in a wild trading session that saw the volatility index climb above 37 and material names leading the slide down.

Guy Adami said he was surprised by the huge selloff, while Joe Terranova said 1183 is now the line in the sand for the market as investors search for a point of reference.

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 on TV

Karen Finerman said the market was in no man's land. She said she had her shopping list out, noting Google ( GOOG) and Cummins ( CMI) looked interesting.

Terranova said MF Global ( MF) roiled the markets,

Lee noted that the financials were having a tough time, with the Select Sector SPDR Fund ( XLF) down 5% on contagion fears.

Fred Cannon, of Keefe, Bruyette & Woods, said the U.S. financials are tied to the hip to the European financials, adding the MF Global situation only made the situation worse.

Cannon said the situation will provide ammunition for the enforcement of the Volcker Rule. He said MF Global was in a regulatory blind spot in terms of its size and broker status. He said the eurozone debt crisis will only change when banks in Europe actually raise capital.

Cannon said regional banks offer an interesting value in the otherwise hard hit sector.

Turning to the markets, Jim Bianco, of Biano Research, noted the high correlation between the S&P index and S&P stocks. He said the average S&P stock is 85% correlated to the index, a 80-year high.

He said it's very difficult to be a stock picker when government intervention overwhelms the markets. He agreed with Adami that there are exceptions to this rule such as McDonald's ( MCD) which continues to trade well after hitting a 52-week high in a down tape.

Lee turned to the MF Global, which has turned to the bankruptcy court in a desperate bid to stay afloat. Jake Zamansky, a securities lawyer, said the company broke a cardinal when it failed to segregate customer funds. He said he's been receiving calls from investors and customers who are running scared, not know what is going on.

He predicted criminal and civil fraud charges will be filed against management and CEO Jon Corzine, along with massive shareholder lawsuits as early as the end of this week.

He also said regulators will be looking to see if MF Global executives were involved in short selling in the past 30 to 60 days.

Lee noted that CF Industries ( CF) was down slightly after a good report earnings report. Finerman said she wanted to see how many shares the company will buy back. Adami considered the stock cheap at this level. Terranova agreed, saying the stock was a play on corn futures.

Lee turned to Tom Porcelli, RBC Capital's chief economist, to comment on what Fed chairman Ben Bernanke might say Wednesday at a press conference after the end of a two-day meeting of the Federal Open Market Committee.

Porcelli said it wouldn't be surprising to hear Bernanke talk about the possibility of QE3 after two FOMC officials hinted about this alternative. He said the 10-year Treasury has real good shot of dropping to 1.5%.

Is there a silver lining to retail downsizing? Brett Sheets senior vice president for leasing for Cole Real Estate Investments, said his company is working with companies that are downsizing and offering the space that is freed up to other businesses. He said the necessity- and value-based businesses are especially suited to step in and pick up the space.

Despite the growth of online commerce, he said there will always be a need for brick-and-mortar businesses.

In the final moves, Jon Najarian said to watch the put activity in SPDR S&P Retail ETF ( XRT). Terranoval said to keep an eye on gold. Adami said Human Genome ( HGSI) is too cheap, while Finerman liked Carefusion ( CFN). Pete Najarian liked AK Steel ( AKS).

-- Written by David Tong in San Francisco.

>To contact the writer of this article, click here: David Tong.

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