'Fast Money' Recap: Falling Markets and Employment Data

NEW YORK (TheStreet) -- The S&P 500 dropped 2% in Thursday's trading. 

On CNBC's "Fast Money" TV show, Steve Grasso, director of institutional sales at Stuart Frankel, said investors didn't seem to be panicked when selling. He added that short-sellers were also covering, likely because of Friday's non-farm payrolls report. He said 1,910 should be support for the S&P 500. 

Brian Kelly, founder of Brian Kelly Capital, said the employment results from the non-farm payrolls report needs to be very close to economists' expectations. Otherwise, it will likely add pressure to the selloff. 

Dan Nathan, co-founder and editor of riskreversal.com, said the Russell 2000 has formed a bearish technical pattern known as a "double top." He added that it would be perfectly natural for the U.S. stock market to selloff 7% to 10%. 

Guy Adami, managing director of stockmonster.com, said the iShares Russell 2000 ETF (IWM) seems poised to decline to $108. If it fails to find support at that level, it could drag the rest of the market lower.

Dennis Gartman, editor and publisher of The Gartman Letter, said the S&P 500 seems poised to decline to 1,875 or 1,860, the latter being the index's 200-day moving average. Nothing has fundamentally changed, he said, but investors are worried psychologically. He is still neutral on equities and suggested that WTI crude oil is headed lower. 

If the non-farm payrolls results are better than expected, Adami said bonds are likely to to decline, while equities move higher. Kelly said both bonds and stocks seem poised to decline. Grasso said stocks should react positively to a better than expected result. Nathan argued that a good labor result is already priced into the market. 

Nathan added that the PowerShares QQQ Trust ETF (QQQ) is a "dangerous asset" right now. He reasoned that 35% of the fund is comprised of four stocks -- Apple (AAPL), Google (GOOGL), Microsoft (MSFT) and Intel (INTC) -- that all have really positive sentiment. If that sentiment changes quickly, the ETF could selloff quickly. 

Ben Kallo, senior research analyst at R.W. Baird, has a buy rating on shares of Tesla Motors (TSLA) with a $275 price target. He said the company reported a very good earnings result, beating on top and bottom line expectations. 

However, guidance for the third quarter was a little below analysts' expectations. But, delivery expectations for next year of 100,000 units is vastly higher than everyone expected, Kallo said, which should outweigh the negative news about the third quarter. He is a buyer at current levels.

Nathan said Tesla will be a good stock to own for the long term, but it's too hard to buy near current levels. Adami said investors should either buy Tesla on a breakout over $230 or on a pullback to $185. Kelly said Tesla is hard to trade, but should be a solid long-term hold 10 years from now. 

Adami said GoPro (GPRO) had "very strong" gross margins compared to year ago figures. He is a buyer on a pullback. Kelly is also a buy of GoPro, but in the low-$30s. 

Nathan pointed out that the SPDR Homebuilders ETF (XHB) hit nine-month lows. The exchange-traded fund is not acting well, he said. Kelly added that the housing market will be under even more pressure when interest rates rise. 

Adami suggested that LinkedIn (LNKD) has more room to the upside. Investors should use $175 as their stop-loss. 

Grasso called Expedia (EXPE) "buyable," but said to do so on a pullback. 

Kelly said the weaker-than-expected guidance from SunPower (SPWR) is pulling the stock down. He is a buyer at $32. 

The traders were asked which stocks they would buy following Thursday's selloff: Nathan is a buyer of Verizon Communications (VZ), Grasso is a buyer of Google, Adami is a buyer of BlackBerry (BBRY) and Kelly is buying Whole Foods Market (WFM) with a stop-loss at $36. 

Michael Pachter, managing director at Wedbush Securities, said Activision Blizzard (ATVI) is very a "misunderstood stock." It's at the beginning of a new gaming cycle and should surprise investors for the rest of 2014. GameStop (GME) will have a surprisingly strong July quarter and strong holiday season, he concluded. 

T-Mobile U.S. (TMUS) climbed 6% and was the first stock on the show's "Pops & Drops" segment. Grasso said investors can stay long the stock, if they can handle the volatility. 

Avon Products (AVP) popped 2%. Adami said investors can buy the stock with a stop-loss at $12.75. 

Herbalife (HLF) fell 6%. Nathan said investors should not buy the stock. 

Yelp (YELP) dropped 11%. Kelly said investors should sell the stock, even after today's big decline.

Adami said investors should buy Apple (AAPL) on a breakout over $101 or on a pullback to $88.50. Grasso concurred. 

Kelly said investors should buy Valero Energy (VLO) to play the fall in WTI crude oil prices. 

Grasso is a buyer of Cheniere Energy (LNG). 

Adami said to buy Exxon Mobil (XOM) on a pullback to $95. 

Nathan pointed out the bullish options activity in the CBOE Volatility Index (VIX.X), also known as the "fear gauge." Specifically, someone bought 90,000 of the $21/$30 bull call spreads for $0.69. If the play is successful, it will be bearish for the stock market. 

Grasso said the new CEO should help shares of Target (TGT) catch a boost. However, if the market continues lower, than Target likely will too.

For their final trades, Grasso is a buyer of Mobileye (MBLY), which goes public on Friday, and Kelly is a buyer of the Market Vectors Russia ETF (RSX). Adami said to buy BlackBerry and Nathan is a buyer of put options on the QQQ ETF if it bounces on Friday. 

-- Written by Bret Kenwell in Petoskey, Mich.

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

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