'Fast Money' Recap: The Profit-Taking Spreads

NEW YORK (TheStreet) -- The S&P 500 sold off again on Monday, closing lower by 1.08%. 

On CNBC's "Fast Money" TV show, Brian Kelly, founder of Brian Kelly Capital, said profit-taking has found its way beyond the tech sector and into other market leaders such as U.S. Steel (X), AKS Steel (AKS), Home Depot (HD), Lowe's (LOW) and Tractor Supply Company (TSCO). 

Guy Adami, managing director of stockmonster.com, said he thinks the market will bottom shortly and begin to bounce from current levels. 

Dan Nathan, co-founder and editor of riskreversal.com, is short the Financial Select Sector SPDR ETF (XLF). He argued that financial stocks already have a lot of good news priced in, making it hard for them to rally, while increased regulations will make operations more difficult for individual banks. 

Karen Finerman, president of Metropolitan Capital Advisors, said she is staying long financial stocks heading into earnings season, with Wells Fargo (WFC) and JPMorgan Chase (JPM) reporting on Friday. She also bought Google (GOOG) on Monday. 

Nathan pointed out that Starbucks (SBUX) and Nike (NKE) are trying to hold very key support levels. 

Dan Niles, CIO of Alpha One Capital Partners, said a lot of technology companies have rallied for no reason over the past year. He pointed out Amazon (AMZN) and Google each missed estimates on three of its last four earnings reports. 

While Google has good growth, the stock was up over 50% in 2013 despite the earnings mishaps. He suggested the stocks that don't report good numbers will be the ones that get hit hard in 2014. He likes Altera (ALTR) and Xilinx (XLNX). 

Nathan suggested Amazon will decline another 5% to 10% if it misses earnings expectations for next quarter. However, he said if the company can grow earnings, the stock may begin to rally once again. 

Andrew Wallenstein, editor-in-chief at Variety Digital, was a guest on the show. Regarding Yahoo!'s (YHOO) plan to take on original programming (like Netflix's (NFLX) House of Cards), he said the project will be expensive, roughly $700,000 to $1 million per episode. Yahoo! plans to do 10, 30-minute episodes. He said that a huge "hit" could be significantly positive to be the bottom line but admitted that it would be unlikely. 

Kelly agreed that it seems unlikely for Yahoo! to generate a "big hit" in original programming. 

Adami pointed out how poorly the stock has traded, suggesting that perhaps the Alibaba IPO won't be as "spectacular" as investors had thought. 

Nathan said if Apple's (AAPL) earnings results are bad this quarter and the stocks still holds the $500 level, that's when investors should buy. 

Finerman said she would not short-sell Sears Holdings (SHLD). She called Lands' End "expensive" at current levels, which began trading under the symbol LE on Monday after being spun off by SHLD. 

Kelly said investors should wait for the iShares MSCI Brazil Capped ETF (EWZ) to drop to $42 before buying.

Adami said not to buy Procter & Gamble (PG) solely because it increased the dividend. He added the stock is not cheap in terms of valuation, meaning it's susceptible to pulling back with the broader market. 

Kelly said he would avoid 3-D printing stocks. 

Dennis Gartman, editor and publisher of The Gartman Letter, said he sold out of most of his positions in U.S. equities. He reminded investors it's still in a bull market and therefore they should not short-sell the broader market. Instead, they should only go to "neutral," meaning not long or short, and wait for a pullback to buy. He added the economy is still doing well, just not as well as many had hoped.  

Newmont Mining (NEM) fell 1%, making it the first stock on the show's "Pops & Drops" segment. Adami said investors should wait until next week to consider buying. 

World Wrestling Entertainment (WWE) plunged 15%. Finerman said she would avoid the stock. 

MannKind (MNKD) dropped 8%. Kelly said he was not a buyer. 

Nathan pointed out the bullish options activity in Pandora (P), where one trader bought 22,000 contracts of the May $31/$35 bull call spread for $0.55 per contract. The breakeven on the stock is at $31.55. 

Dr. Yaron Werber, research managing director at Citigroup, said small-cap and mid-cap biotechnology stocks are overvalued. Therefore, the current pullback is warranted. He argued that many large-cap biotech stocks trade with reasonable valuations, given the companies' earnings and revenue growth and product pipeline. 

Nathan said investors could consider buying the SPDR Biotech ETF (XBI), which is near its 200-day simple moving average. 

For their final trades, Kelly was buying Bunge (BG) and Finerman was a buyer of Google. Adami was a buyer of General Growth Properties (GGP) and Nathan was a seller of the Guggenheim Solar ETF (TAN).

-- Written by Bret Kenwell in Petoskey, Mich.

Follow @BretKenwell

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter.

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