>> kayla? >> first i'm going to be watching the special at 7:00 tonight. but then i think jackson hole kicking off tomorrow will be very important. if in fact the fed and this discussion around the rate hike is so important. what the chatter is out there. >> melissa, what about you? >> yeah, the damage today was worse, kelly, than i would say even the past three days. the reversals intraday in terms of some of the big sectors like xlv, xlf as well as some of the big stocks like apple and microsoft were stunning. so we'll see what the technical damage is with the technical analysts on "fast." >> straight over to you guys. >> thanks, kelly. cnbc's breaking coverage of the historic sell-off continues. i'm melissa lee. and if you're just joining us the last half hour of trading was chaotic. the dow cratering into the close, down 200 points at one point it was up as many as 400 points. that is the biggest refrlts since the financial crisis. the s&p 500 closing at the dead lows of the session, down 1%. at its highs it was up as much as 3%. the nasdaq giving up all its gains. it finished flat. does a close like this signal even more pain ahead tomorrow?

tim, what do you say? >> of course it does. and again it's because we had this morning. it was a bounce that started last night. it wasn't just china. remember we got out of the studio last night and s&p futures were already up ten handles, started going higher, is g. news out of china overnight. this is very destructive to see the reversal we saw. you close well through the lows and if you look at the market sentiment we're back to august 2000 levels if you look at the relative strength indicator, which is a measure of momentum, people. and this tells you this market hasn't been this sold off since the u.s. was downgraded back in 2011. and i was just mentioning some of the reversals we saw intraday. we can take a look for instance at apple. it was down 6.8% from session highs to session lows. energy stocks down 5.6%. health care down 5%. these are some pretty stunning reversals, karen, intraday from high to low. >> they are. it's a pretty scary market. i think for a lot of traders to come in today to see the market looking up 60 or 70 handles where it was this morning that's zai scary because it feels like

levitation as opposed to coming into a sell-off that then gain steam and industry higher. that feels better. this market, i've got to step back from this market. i was feeling a lot more comfortable buying something yesterday than i would do anything today, buy or sell. i feel like it's -- there's so much uncertainty around it could go either way. and if you could see a lot of people if you did see a big up market, i missed the bottom, i've got to jump in, or the other way. i would not buy nor sell tomorrow. >> if guy were here, because you're sitting in his seat, some people would say this was a buying opportunity, that people wanted to use the strength to sell some of their positions. sorry, selling opportunity. >> yesterday it was frantic on the floor. i felt there was a real sense of urgency. people were scratching their head, they didn't know what to do with the market. they didn't know how to react to it. and i thought today when we came in it felt that people wanted to

sell the strength. it was a feeling of disbelief. what had changed overnight. there was nothing that had changed in my mind. i think the technical damage is done and you need a lot of heal time. 1867 to close within decimal points of yesterday's low just wreaks of all the algorithms in the electronic trading that's involved right now. then you also have to look at why we have these weak closes. no company buybacks that have kept this market up in the last ten minutes. those 10-b18 rules, the company disappears from 3:50 on. you get that precipitous drop going into the close. i think the market probably corrects another 10% or 15%. >> i don't see a 10% to 15% correction, actually, melissa. i look at the tape today and say there was a lot of guys that came in long-a a lot of traders that came in long this market, and i think that exactly what karen was sort of identifying, they were hoping they'd see this move higher and they were waiting to sell those trades, they were waiting to sell their longs out toward the end of the day. they picked their spots and they

identified levels but they waited toward the end of the day. when they moitsed this market start to turn they rushed for the exits and i think the retail investor around 2:15 or so is usually when they make that phone call to their mutual fund to redeem shares at nav at the closing price today. that's when you saw a lot of sell orders hit the floor, and i think we had $3.7 billion worth of sell orders that hit the floor -- >> that's interesting. i think you're right. are you saying people awho bought the market on the dip yesterday saw the market start to sell off said i'm getting out bays don't trust the market like karen or steve in. >> people wanted to get long stocks, they got long quickly thinking we were going to rally fast and if they were short they covered very quickly. and then we came into this malaise in the middle of the day. karen identified this. it felt like a very tired market. i know our desk was super quiet. however, late in the day we saw a massive amount of sell tickets come on board. >> what do you do? do you step away from a market

like this or go in and say it's a buying opportunity? >> what you do here, folks, is simplify your portfolio. you want less moving parts. tomorrow's probably not the day to go and hedge up your book because volatility's going to be sky high. this is a day you simplify if you haven't done anything, i would probably do nothing. although you figure out the places where you have the most vulnerability to the overall portfolio and just because you think it could go higher someday doesn't mean you have to sell it now. >> sticking with the massive reversal on the markets our next guest says there is much more selling to come. gray wolf execution partners chief technical analyst mark newton is breaking it all down at the smartboard. mark, what do you see in the charts? >> it certainly doesn't look like the damage yet is complete and it looks like there needs to be a bit more on the down side, particularly after today when we rally early and fade. if you look at a couple different charts, a lot of people are trying to compare this pullback to what we saw in october of 2014, even 2011. it's important to look at a couple different things. one is if you look at the charts back of what we saw from 2014 to now, the sell-off we saw last year was just under 10%.

as of now we've officially exceeded that. not only did we break july lows but we've actually eclipsed and broken this entire trend line going back since 2011. that's the first thing. it's somewhatting negative. in 2014 monthly mac d as a momentum indicator that a lot of technicians use was also positive back then. right now it turned negative as a result of this pullback. even though we recovered, momentum started to roll over and is since right now negative as we've started this. that's also a negative. if you look at things like advance-decline, stocks hitting new highs versus lows, percentage of stocks right now hitting new lows are far higher now than we saw back in 2014 and the stocks hitting new highs back in october of last year was almost 300 whereas coming into the sell-off just even a couple weeks ago it was only about 50. so it continues to be less and less and less on this pullback. the other chart that i want to look at is just to show the trend line from 2011, and it really undercut the lows almost

exactly. so as you can see back here during the 2014, the pullback held right where it needed to whereas this time it actually has broken this. and so it looks like we need to get a little bit lower before things are complete. i have a couple different areas in mind. one are these october 2014 lows themselves, which is 1820. if we get under that, then it's likely we're going to get down to 1680, which is a bigger trend line from 2009. that would be about another 10% to the down side. now, the one thing the market has going for it is that we're starting to see excessive signs of pessimism. we saw the equity put to call get up to the highest level since 2014. we've seen vix backwardation where the spot vix was almost double what we saw in the one, three, and six-month futures. excessive amount of volume already in declining versus swransing issues. technically these are all things historically that have coincided with short-term lows. my thinking is the strength of this pullback recently is a little more severe and we're also coming into two of the most bearish months of the year,

september, october. so it's likely that even if we get a bounce, which i think probably can happen within the next three to five days, that the market and the s&p does not get back over 2,044 but if anything bounces and then does very similar to what we saw back in 2011, where the initial pullback held in august, we bounced a little bit, and then we fell further in september, october down to 1,680. >> mark, thank you for your analysis. appreciate it. >> my pleasure. >> mark newton of gray wolf. this lines up some levels you have outlined. do you think we get down to that 1600 level, 1620? >> i see actually where mark drew his line. a lot of these things, they might not be the same that mark drew but i have them on a lot of fibonacci retracement levels. i get down to 1672, we're not going to quibble over eight handles. but i do see what he's talking about. that's going to be a major break. but i will tell you this feels like a bigger sell-off, whether you're on the floor, whether you're on the 50 institution that's i speak to on a daily basis. this feels different than it has

the last couple of times when you get these fake sell-offs. we haven't seen a real sell-off in years now. >> do you feel worse today versus yesterday? >> i sat on this desk right there and i said we're probably going to go down another 10% or 15%. i feel the same way now. we had two negative quarters for the dow. last time we had that we were off 37% and 50%. i think we're going to see a massive sell-off now. these take a while to play out. these are quarterly charts. this could be a matter of months or not. but i still think the path is down much lower. >> karen, you're a hedge fund manager. >> yeah. >> how do you manage your portfolio in a market like this? especially as you hear forecasts like mark says for another 10% down. >> right. i -- you know, we have a hedge book. so we always have some protection. although in a market like this it seems like your longs can definitely underperform that protection. i think for us the best thing to do is to just pick absolute levels of companies we're comfortable-w a balance sheet we're comfortable with where it feels like you know if it goes

down more we'll buy more later. i know i'm not going to be able to pick the bottom. i'm certain of that. something like a macy's which we did buy some yesterday. if it got down to 55, i would buy some more. that's only going to happen in a terrible tape. i realize that. but i would be comfortable buying some more. >> quick programming note here. tonight at 7:00 eastern time we'll have a cnbc special report, "markets in turmoil." we are monitoring the asian markets as they begin trading. plus getting you ready for the day ahead here in the u.s. after this wild day on wall street. again, that's tonight, 7:00 p.m. eastern time here on cnbc. up next, the banks getting some very big upgrades, but it wasn't enough to save them today. could that spell even more trouble tomorrow? plus citi standing its ground and saying the fed will raise rates in september. we'll hear from the strategist who made that bold call. and later, the cramer-coined fang stocks may be your best places to hang out. facebook, amazon, netflix, and google, fang. they closed mostly higher. we'll tell you what it is about those names that's got investors so excited. stay tuned.

cnbc's breaking coverage of the sell-off continues. a slew of upgrades on the big banks today helping to send the sector higher initially.

but even those upgrades couldn't keep those stocks higher. jpmorgan closing just about at its dead lows. dom chu's got the details on all these big calls. dom. >> upgrades galore here. let's talk about bank of america first. you can check out what's happening with the chart. at least for the day. you can see here we did, yes, lose a lot of momentum from bank of america despite analyst upgrades from bernstein, mcquarry, and then even before from other analysts throughout the course of yesterday as well. bank of america, one of those stocks that's become a battleground for some of these bank traders and bank investors. also jpmorgan getting a notable upgrade today from the cliechblthz lsa's mike mayo, a man who's had an interesting relationship with jpmorgan over the course of the past few years. he says it represents a compelling, compelling buy and is bullish on the stock. jpmorgan shares, you can see they're still down by about half a percent, losing steam in the middle of the afternoon. and i just want to point out just for some perspective the bank stocks today with their declines now are the second

worst-performing sector in the s&p 500 over the course of the past week generally since the sell-off started. the only one that did worse was energy. we know about the lows there. but just for perspective, financials and energy the two worst performing sectors in the s&p on the sell-off since it started a week ago. back over to you guys. >> thank you, dom chu. as we mentioned, the financials ripped higher only to close lower by the end of the session. clsa's mike mayo was out with a bold call-up grading jpmorgan to a buy from an outperform calling it the lebron james of banking. take a listen to what he said on the halftime report. >> you think of jpmorgan as offense, trading powerhouse, all that, but you know what, jpmorgan's very good for defense. so who knows where the markets are going to go in the short term? so we wanted some protection. and if you look at jpmorgan, they are resilient. jpmorgan is the lebron james of the global universal banks. >> do you feel the same way, karen, about banks as you did a week ago or so? >> well, file the same way about

jpmorgan. yeah, i do. i agree with mike. i love jpmorgan. i actually bought some jpmorgan yesterday. when you think about the opportunity to buy jpmorgan here, almost a 3% dividend yield. under ten times earnings. you don't get a lot of chances to buy it at that level. you probably might get one tomorrow, though, i suspect. but that's the only one that i've added to. i still own citi, still own bank of america. >> what does seem to have changed in the past two weeks or maybe even week or so is the notion about the steepening yield curve, and if you take a look at the action in the kre, which is the regional banks, that really took it on the chin. that started turning way before the xlf started turning today and finished the day by more than 2%. a plc was down by almost 4% in the session, and that happened, by the way, in the last 45 minutes of trading. >> if you are not getting a steepening yield curve, the idea out there is there is no raefrnz to buy banks at this point. i watch these wealth management companies that were outperformers. the e-trades, the charles schwab, giving it all back. the td ameritrades.

now you look at bank of america down 14% year to date. you look at goldman down 8%, jpmorgan down 4%. you can't find any safety. so i don't think it's a matter of where do i invest in banks. i think you stay clear of them until you get a little more clarity adds to whether or not we're going to see a rising rate environment. because at this point there's no way the fed should be raising rates. >> net interest income for jpmorgan in the second quarter twooz bips better. the question was is it going to get a lot better in the third quarter based on things you're talking about. i don't think the fed has to necessarily be out of the picture for september. i know that may sound absurd today. but either way i don't think the yield curve changes that much based upon the news of the last couple days. >> sticking with upgrades here let's talk about apple managing to hold on to solid gains throughout the day only to close at the dead lows with the rest of the market's major reversal. wells fargo upgragd the stock to an outperform from market perform this morning saying the recent correction is an overreaction. seaburg. >> look, i mean, i think apple's dead money. i don't think the stock's going to really move in one direction or the other meaningfully in the

near term. i look at it and say this upgrade cycle that we're coming to, our channel checks account indicates that the preorders for this are roughly down 10% from the last upgrade cycle, which is not positive. so i look at it very clearly and say i think they're going to have challenges going forward. obviously, this is the highest margin product. and look, what's the next thing on the horizon for them? tremendous amount of cash. i like the stock from the standpoint that it's not going to go much lower but it's definitely not going to go higher. >> the next thing on the horizon is a big issue. a lot of bears on the stock will say the compares, that is thing next thing on the horizon for apple. the wlds fargo upgrade was like a backhanded upgrade. basically they said it's because the stock corrected so sharply. >> valuation. >> i'll preface this. the guys upgrading apple were saying it's going to increase its multiple. now you can't say apple's a value play, even though i would

say 94's your down side from yesterday. trade off of that low. and that to me is a place where you trade apple here. and again, it finished flat effectively on the day after a big move. disappointing. but -- >> 7% reversal. >> and it's a market proxy stock right now. if you own apple, you own the market. let's be clear. >> still ahead, think there's no rate hike ahead? think again. citigroup saying there will be one in september. that firm's head of north america economics will be here to explain what it is that has him sounding the alarm. you're watching cnbc, first in business worldwide. in the meantime here's what else is coming up on "fast." >> can't take the heat? relax. because we have four safe places to put your money. we'll tell you what they are. plus -- >> i added to facebook. >> you're not alone, cuban, because the cramer fang stocks have their teeth back. and we'll tell you how much higher these stocks can go. when "fast money" returns.

i understand the financial stability case for an increase in rates, and it would have been possible if there'd been more demand coming from something else. but today with the vix at 40 it seems to me you have a quite different argument, and today the only argument you really have is, well, it's

uncomfortable to be at zero. >> that was former treasury secretary larry summers on "squawk box" this morning baesically saying the fed should not raise rates in september. but citigroup came out with a new note today saying signs of local containment and systemic fallout implies a september timetable for fed lift-off remains. william lee the firm's head of north american economics and the man behind the note joins us now. william, great to speak with you. >> hi, melissa, thanks for having me. >> i want to zero in on page 2 of your note where you do say that you caution your clients for signs of disorderly asset markets. the fed does care about persistent disorder in financial markets, not just volatility but apparent freefalls. this could delay lift-off. have we not seen that in the past four days? >> well, what happened today shows that we're not in a freefall, right? the markets did go up. they did recover. so two or three days of what apparently looked like disorderly markets have calmed themselves. that's the kind of volatility the fed expects at the time of lift-off, and when you get a

shock of the sort we got from china. there's no question the markets have been disturbed. >> william, though, if you take a look at the markets the markets actually close lower. and if you take a look from high to low the s&p is actually down 4%. the nasdaq was down 4% as well from high to low. that seems to me the fourth day of a freefall in the markets. >> a freefall means that markets are completely one-sided, you can't find a buyer anywhere, but right now it sounds like they're trying to find a price and it sounds like one of the problems that larry summers mentioned was financial stability. we have had overvalued asset prices because we've had zero rates for so long. that distortion is something that has to be removed. the question is when and how do you remove it and can you remove it now when we have this kind of world turmoil apparently? well, the turmoil is i think still self-limiting. it hasn't quite spread to be global systemic freefall. it is pocketed. we can trace to china. we can trace the commodities. but we can't say it's a generalized free-for-all, let's get out of here, i'm going to go hide my cash under the mattress. >> hey, william, it's tim. do you think the risk to the fed for not going in a world where

nothing -- the backdrop of no freefall is a bigger risk to not move in some way, maybe it's ten bips, maybe it's something in september, than to actually go? >> the risk of not moving is when they do move the market's going to ask them what was it that convinced you it's okay to go now? whatever the information set is, the market's going to hone in on that and that'll destroy the fed's ability to do forward guidance by being data based and broadly data based. the other thing to consider is right now is the best time to move because we avoid the ill liquidity conditions and we allowed the fed enough time to say we're going to move now but it's going to be very gradual, we're going to take our time and depending on how markets react we will adjust our timing and our pace. right now i have the fed moving at 75 basis points a year, which is the slowest on the street. there's no reason not to start in september. >> william, going to leave it there. thanks for joining us. appreciate it. >> sure. >> william lee of citi. what do you think? >> i would say -- well, let me put a caveat on it.

i think they do move. should they move? no. you cannot move into slowing global growth. you cannot move at this point. the ten-year treasury is coming down in yield. that gap is not there anymore. they will push us into recession. >> so you're in the ray daalio camp, ray dahlio, bridgewater, essentially writing today that the risk in his view is that the fed is so committed to the advertised tightening path that it will go ahead and do that no matter what. >> well, actually, if you told me right now what the fed is going to do, and let's say it's 12 basis points or something, split the difference, i wouldn't know whether the market would go up or down on that. i'm not sure -- >> i bet it rallies. the market's waiting for this. and 10 bips or 12 bips would be the right thing to do because it would send the message that we're going to move slower. so the imputed 2% over the next couple years it says no, we're going to mav in a way that makes sense. >> up next the markets closing at dead lows today but the so-called fang stocks, cramer's facebook, amazon, netflix, google, all hung in there

despite this turmoil. are these names the best places to hide out amid the volatility? plus much more coverage in today's stunning rally reversal. the dow climbing 441 points before reversing course. a day after stocks turned in their worst performance in years. these are historic times on wall street. you're watching "fast money" on cnbc. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

we're back here on "fast money." another unprecedented day of selling for stocks. check out this time lapse of the dow's crazy trading day. the dow was up triple digits at the beginning of the trading day today. it was up 441 points in fact at the highs of the day. but the rally quickly faded into the afternoon and then turned negative around 3:40 p.m. from there the selling accelerated. the dow closing down 200 points. and that represents a 662-point swing. it is now down 14.6% from its may high. the s&p 500 is now down 12 1/2% from its high. here's what's coming up on the second half of "st money." despite today's sell-off, we'll reveal the one set you haven't heard that could indicate the market is about to take off in the next week. plus crude managing to rally today. is it time to get in on big oil? a top oil analyst weighs in on

some of the industry's biggest names. i'll start off with the fang stocks. that would be facebook, amazon, netflix, all closing higher with just google ending the day lower. could these stocks be showing some teeth? ha, ha. in a tough market. dom chu's got the details in the newsroom. dom. >> of course we all know what you did right there, and we appreciate it. so of course let's take a look 59 it. the intraday charts telling an interesting story about the momentum because fang, these stocks, these media, these technology shares have really been responsible for a lot of traders saying this has been a fuel, a good source of fuel for the rally. take a look at facebook on a two-day basis. you can see there we lost momentum into the closing bell. so facebook we were up about a percent. amazon shares, the same kind of story here, up by about 3/4 of 1%. but again, you can see by the chart there two days'wise to give you some perspective, we trailed up. netflix the big winner today. of course a huge source of momentum. it's been the single best performing stock in 2015 in the s&p 500. more than doubling in value.

and it's been down a lot. so it bounced back by about 5%. but it too finished near its lower points today. then google as well. let's finish out the g with fang. you can see those shares down in the red for the day. i i want to put one more in there for your edification and that's apple shares because we talk about it quite a bit. it did manage to post some gains by about half a percent. we also threw a cnbc.com poll together and we had thousands of responses just in the phew first moments of putting this poll up here. did the late-day sell-off change your view of how the market is and how you would trade it? 26% of respondents said they are staying bullish. 14% said they're getting a little less bullish. 19% going neutral. and of course the down side bias, 22% say they're turning bearish and then another 19% say they're pretty much selling everything. it gives you an idea at least from the retail side of things, our viewers and readers, melissa. back over to you. >> this is a market change from

yesterday's poll. thank you for, that dom chu in the newsroom. let's trade these fang names. you made a point that you stick with what has been working, and fan of the gang has been working. >> all of these names have really worked out well. these are names people have gravitated toward. these are names that will continue to do very well. all these stocks ended "up" on the day because these are the stocks people are pointing to they want to put their money into because that's where the growth is. if you look at the difference between growth and value today, there was a vast difference between growth and value. people are gravitating toward these growth names. >> the problem is, though, i think that's exactly what's wrong with the market. everyone complaining that the market breadth was terrible, we were only relying on six stocks, the names fang and then you add in the apple to that and gilead. so if all we got out of this whole thing was to sell off those names and the whole entire market and then rush right back into them, what have we gotten? what have we accomplished? nothing. >> mathematically it doesn't -- >> but think about when the market's selling off for fear of

growth. and if you're getting growth to me, facebook is getting you growth that's not reliefrnt on china. and they're giving you growth in a country, in this country, and globally, but where there's a paradigm shift going on in their core business and that's not changing, it's getting better. >> totally agree -- >> real quick to add on, behind the scenes, when you watch utilities run 10% when the market comes in 2%, the market's not worried about growth. the market's worried about preservation of capital and where's my yield coming from because there's absolutely no competition. >> pent-up money is dying goat into energy. and i mean that. the pent-up money is dying goat into energy. sitting on the sidelines waiting to move. it may take some time. tough a 6, 9, 12-month time horizon you're foolish not to buy these high-quality names. >> getting back to your search for growth. you take a look at ibb it finished flat for the day. but look at the big gains within it. gilead was up almost 2% today. biogen idec. >> look at earnings season. look at what was rewarded. i totally agree with that.

and i believe that -- and steve and i can agree to disagree. i think the market is concerned about growth and what the might do to that growth as well. >> one thing that concerns me a little about biotech besides obviously the huge swings is so much of what's been driving the movement here is m&a. and when you have a big market dislocation like this you have buyers who say things are cheaper. sellers are not ready to change their price level. they're not for sale at a lower price. you get a big bid-ask spread and a standoff and you get fewer deals. >> a stall in m&a. >> a stall wouldn't be shocking. >> from u.s. tech to chinese internet stocks check out these names today on fire even as the shanghai and u.s. stocks continue their decline. but despite today's gains look at the performance of the stocks year to date. not a pretty picture. baidu down 40%. alibaba 34%. the only one in the green is ren ren, the facebook of china. so should you trust the bounce today? >> i'd be careful about the bounce today. these names trade very much in

line with a london close. london and german stocks closed on the highs, closing the highs before we pulled back. these names are going to pull back tomorrow. i think they're oversold on the china implax i still think baidu is the best value in the growth in the group. i think around 130 you have a little more support. but again this is a stock i'm buying on weakness. >> you're saying you watch the london close as an indicator as opposed to the u.s. markets or what china's doing? >> the guys that tend to hold this and the hedge funds that tend to trade these things more aggressively are london-based or global-based funds. they trade with the london close for the most part. and you can see that with how these things will trade. >> tonight at 7:00 eastern time we'll have a cnbc special report, "markets in turmoil." we're getting you ready for the day ahead here in the u.s. that is tonight 7:00 p.m. here on cnbc. still ahead the markets are selling off but the pain could soon be over. really. we've got the undercover stat that says stocks are set to take off in the next week. plus, traders are betting one megacap tech stock is about to jump 20%.

we'll explain later in this hour. much more "fast money" straight ahead.

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soon be over. that's according to fund struck global advisers managing partner tom lee who is with us live in new york. tom, great to see you. >> great to see you. >> what are you seeing that indicates to you that perhaps the worst is over? >> well, we published a little fact book last night it just taking a look at corrections. and there's been 28 corrections since 1928. and we wanted to give investors an idea, okay, what are sort of typical market behaviors after correction? we have a few charts here. the first thing i want to point out is that markets typically after falling 10% still have further declines and in the median declines about 3%. i think that's important. because what it tells us is even though you washed out a lot of excesses and we're going to attempt to rally, finding a bottom is not as easy as just falling a certain level and then turning on a dime from there. another thing to keep in mind, though, and i think the reason you shouldn't get too discouraged is that 90% of bottoms once you bottom are

v-shaped and so we've got a chart that shows it takes on average 1.4 times as long to recover the declines. in this case it took us 35 days to go from its peak to yesterday's decline. it would take us roughly 50 days to recover to those old highs. and again, that's the median. but when you look at the data, it's surprising. it's very v-shaped. 90% of bottoms really conform to this symmetry. >> i'm sorry, tom, to interrupt, but when you say 50 days, or whatever the period is going to be, that takes -- the amount of time for a recovery. does that mean we have regained what we've lost in a recovery or does that mean that the v is starting to happen at that point? >> sorry, melissa. yes, let me just make that clear. from the day that we bottomed -- so let's say we bottom in the next week, the amount of days it takes from that day to get back to the prior high is generally

1.4 times as many days as it took for you to fall. so in other words, if it took us 35 days to get to the bottom, it'll take us 50 days to regain the prior high. it's a surprising stat because it tells us markets don't collapse and then die. they actually typically have a symmetric rebound. >> and you also have a stat on how much we gain after three-day 9% slide. >> yeah. it was something unusual that happened yesterday, which is the market over a three-day period fell 9%, which has only happened 12 times since 1928. and it's -- what's interesting is that we compiled some stats and said okay, what does the market look like a week after such a decline? and a typical median gain over the next five days is 7%. it really tells us that the market as we flushed out and we've created a lot of fear, and i think today was an extremely disappointing day and a day that i think really did turn people even more angry and against the markets. it's setting us up for an

eventual rebound that again hopefully takes place soon. but as we think about a week, on average it's a pretty big move. >> sure. i want to throw up your sector picks, tom, but i want to also drill down because i want to get the bottom line. there are a lot of interesting stats here but piece them together for me because it sounds like you're saying that once we finish the selling, whenever that may be, a day or two from now, the bulk of the gains will happen in that 50-day next period where we actually recover, the bulk of the gains will actually happen right after the decline. correct? half of the gains will happen -- >> that's right. if you think about last october, when we look back, it was a v-shaped move. we had a double-digit move in basically a month. and you know, i know investors are really grappling with this at the moment because they're calibrating their views and saying with china uncertain and given where commodities are is there anything here to be bullish about, and i think it's

absolutely true there are things to be bullish about in the u.s. our sector picks are focused on the idea that u.s. housing is a much bigger deal than most people realize. this year it's going to be 220 billion of activity. over the next five years it could be almost 400 billion. so we like consumer discretionary and consumer cyclicals in particular. health care, which is you know, a secular growth story. financials are levered to housing. and then tech, believe it or not, is tangentially related to a housing recovery because ultimately a housing recovery creates jobs, which ultimately creates some wage inflation. companies deal with wage inflation through technology investment. >> tom, good to see you. thank you. >> great to see you. >> tom lee, fundstrat. a little ray of hope. i don't know if you buy it, seaburg. >> well, look, i think we've seen the lows. i put that out there. do i buy it? yeah. i think we do see these recoveries and they do take a lot longer than we do to fall. it's going to take some time to heal the wounds here, but i do think we've seen the bottom in place. i am still a buyer of the market here. again, volatility based on the

fact we're waiting for fed lift-off. once that occurs i think we take off. >> tom lee may think the markets are poised for rebound, but is there anywhere in these markets to hide out for those looking to weather the volatility right now? let's go around the horn, get some safe haven trades. tim-w do you go? >> i just talked about facebook. i'd like to continue that conversation because again here's a company we saw in the second quarter numbers they blew them away mobile's now 76% the engagement is now 24 1/2% roughly of all internet time people spend. it's a company that's actually beginning to monetize in a major way the owned and operated pa ds of their business including instagram, what's app and et cetera. it's a company that's getting the ad space right and far ahead of their peers. it's a reasonable valuation for the growth you get and growth is what people need right now to feel comfortable. >> grasso, what's your safe haven? >> i'm going to go continue the conversation i rebutted tim with his facebook. i went to utilities. and it's southern. sl. i used to be in it. i'm not in it currently. but it yields over 5%. the stock has been up over the last month and a half or so,

10%. obviously it got pummeled with the rest of the market but on a relative basis when the s&p was sideways to down 2% this one was up 10%. that to me sounds safe. >> karen? >> if you want to go something safe and boring something like a pfizer, which we do own, this is not going to knock your socks off like a biotech to the up side or the down side. not so expensive. fantastic balance sheet. nice dividend yield. 3.7%. it's a place to hide out. >> seaburg. >> i think there's a lot of fear obviously through this turmoil about people at home with volatility. i look at it and say splv is a way for you to invest in the s&p 500 lowest volatility names. the performance there is a little bit lower than what you see in the overall s&p. but the lowest volatility names if you can sleep well at night by allocating a certain percentage of your portfolio in think think that's the way to go. >> still ahead, crude rallying today. is it time to snatch up some big oil stocks? a quick round of buy or sell right after this break. plus which megacap tech stock are traders betting is about to

jump 20%? the big reveal in a special "options action" coming up. you're watching cnbc, first in business worldwide.

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microsoft shares falling dramatically into the close along with much of the market, but traders were betting on a big turnaround. brian sutland's in chicago with the action. >> microsoft was pretty weak today, melissa. you take a look at it, the option out here today buying 10,000 january 2017 call spreads, the 45-55. so basically with this trade they're basically betting to the up side. microsoft rallying over 20% over the next year and a half. and these kind of trades where you see stock replacement, buying a call spread, has a high probability of success because we're going to get some big moves in the market. you see that in the vix and volatility going on in this marketplace. so a trade like this where you bet on 20% on the up side ceremony has a big chance of paying off here. at least when you look at microsoft and the way it's trading, that $40 level, 40 to 50 has been its range over the past year. you crack 40 you don't want to own this stock. i'd rather own this call spread like the trader bought. >> you trade the vix. i want to get your take on what's going on in the markets

and what you think the vix curve indicates to you. >> when you take a look at the vix here, these volatility pops have been enormous, and it at least tells you that volatility is going to continue. when you look at some of the vix futures you talk about the curve. these futures are trading at huge discounts to vix. so at least vix futures traders betting that vix falls lower, meaning that fear comes out of the market and the market rallies. so maybe there was some sort of capitulation yesterday like i talked about. and we do get a rally, although today's close i really didn't like the way the action ended in the last hour here. but certainly vix futures trader meaning vix goes lower, meaning stock market higher. >> brian, thank you. for more "options action" check out the full show 5:30 p.m. eastern time on friday. who'd be a buyer of microsoft? or who hates it? either way. anyone want to take it? >> i'm not a buyer. >> to me microsoft is dead money especially in a tape where people are challenged on growth. but also a lot of the good run was from change in management and also margins. they're still i think in transition although doing a great job. >> decline in microsoft today was stunning, down 2.9%. 6.6 from high to low percent.

the late-day sell-off weighing on the big oil names like exxonmobil, chevron, and conoco phillips all ending the day in the red. this despite a bum np crude. which big oil stocks are safe to buy and which should you sell? jason gamble of jefferies is the integrated oil equity analyst. he joins us from london. jason, we're going to do this sort of quick fire style. buy or sell exxonmobil? >> i'm going to have to give you unfortunately a hold since that's my rating on it. but i think there are some competing factors here. exxon is going to provide you with the best down side protection in a falling oil price environment. it has the lowest beta. but by the same token it's also the most expensive stock in the sector and has been the lowest dividend yields. it's got? good with it but also some bad. >> exxon's a hold. how about chevron? buy, sell or hold? >> i'm buying chevron here and i think with chevron you've seen some pretty significant underperformance. but this is going to be the best growth stock in the sector in both 2016 and 2017. it's probably going to take until 2016 for them to actually

demonstrate that the growth is coming, but if we do start to get a rebound in oil prices over the back half of 2016 it's a pretty powerful combination. >> conoco phillips, buy, sell or hold? >> got to give me that hold one again. i think with conoco we actually just kind of had the opposite of the exxon story. it is going to have one of the highest betas in the group. so it's more susceptible to a falling oil price. it is looking more attractive from a valuation standpoint, though. and it does have a very strong dividend yield that i think is pretty well protected at least through 2016. >> what's the best case scenario for all of these ratings in terms of the price of oil? >> well, we're pretty bearish on oil for really the remainder of the third quarter and into fourth quarter. but we do think we can get a rebound in oil prices into the mid 60s next year. that's really based upon what has been very strong demand growth so far. and we think that will continue. but also the fact u.s. production is beginning to roll over. so i think the market rebalances

through the fourth quarter of next year. >> jason, this has been a really tough trade. we have a lot of analysts like you coming on looking at the balance sheet and the ability to weather a downturn in oil and yet these stocks have performed miserably across the board whether or not they're buy, sell or hold rated. at this point is it time, are you still catching a falling knife? i don't know how long you've had these ratings in place, but my guess is you've had a couple buys in your universe at the beginning of the year like you do now. >> you're right, and it has been the wrong call. frankly the fundamentals of the oil market have deteriorated far more rapidly than i would have expected them to. and i really think we look at the oil market being oversupplied by about 1 1/2 million barrels a day right now. that just happens to be the amount that both iraq and saudi arabia combined have increased their output this year. so really the thrust by opec for market share is where we've been wrong. now, where we can take some comfort moving into next year is we don't really see a lot of incremental capacity coming there. iran, yes. that's going to be a headwind,

strong demand growth. i think the market can absorb that. >> jason, pleasure speaking with you. thank you for your time. jason gammel of jefferies, the integrated oil analyst. is this also a no touch at this point with no clarity on where oil prices head? >> i'd like to start with a no touch. but let's look at names that have been insulated to a lot of performance. it's been valero and tesoro. >> until recently. >> until recently. and they gave back 20% in the last couple of days. they were both up, high 30 percentage points, year to date, and now they both gave it back. i think if we go back to that same theme of you buy the winners in the marketplace and this marketplace, this institutional investor is not coming up with new themes. if this sector rebounds, they're going to rebound and go back into valero, back into tesoro. the only one name out of these large integrated names that i would buy would be exxonmobil and i would buy it against a $64 stop only because that's what people equate big oil with i

think the average investor would rather buy this one than a whole bunch of other ones. >> even the refiners, even if oil going higher hurts the spread, you think -- >> it does hurt the spread but i think people think they're insulated. the only thing that killed the refiners is they're worried about the demand side. they're worried about growth and demand versus anything else. >> okay. coming up next we'll tell you what the traders are watching for tomorrow after this break. more "fast money" straight ahead. biggest swing since the dark days of the financial crisis. tonight i'm reviewing the stocks that must be sold tone any strength. plus the ceo of buffalo wild wings. "mad money" is next!

tonight at 7:00 p.m. eastern time the cnbc special report, "markets in turmoil." full coverage of today's wild ride and what could be another volatile day tomorrow. time now for the final trade. around the horn we go. tim seymour. >> you have to watch currencies, you have to watch the carry trade. that's giving you an idea how much capital is still to be unfolding. 1.16 on the euro watch these levels. that's what i'm watching. >> david seaburg. >> toll brothers got beat up today, tol. i'm a buyer of the housing sector. i think it's going to rebound in the second half of the year. i'd be buying toll brothers on this pullback. >> karen finerman. >> i'm going to be watching jpmorgan. i think the banks are central to the u.s. obviously and we'll see if this was just a sell-off into nothing at the end or more fear. >> grasso. >> i'm going to be watching apple. timmy said earlier apple's the proxy to the market. if apple holds in the market

holds in. sea if it holds that par level, 100. >> i'm melissa lee. thanks so much for watching. see you again tomorrow at 5:00 for more "fast money." meantime, "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it. "mad money" starts now. hey i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm trying to save you money. my job is to put it all into context and teach and coach you. call me at 1-800-743-cnbc and tweet me @jimcramer. today is a classic example of why i hate big openings. i warn you never to bite onhe