turmoil" with jim cramer, brian sullivan and sara eisen. again, it begins in just a couple of hours' time. my thanks to the panel. mike santoli, elon moore for being here this afternoon. that does it for us on "closing bell." "fast money" with melissa lee begins right now. >> thank you, kelly. cnbc's breaking coverage of the sell-off continues. i'm melissa lee. if you're just tuning in, it was a brutal day for stocks. the dow plummeting over 500 points at its low. the s&p, the nasdaq and the dow all closing down nearly 3%. and with that move the three indices are now back in correction territory. this was the worst start to a september in 13 years. so we asked tonight did today mark the death of the historic bull market? guy adami, what do you say? >> i don't know if today marked the death of it. i think we can go back last week and look at some of the price action last week. i think potential death of it was when the chinese came in i believe and devalued the won. that's a longer conversation not to have at this time but i think the pieces have been in place that sort of foreshadowed what's happening, not least of which, by the way, is the absolute

crushing the commodities have been under. the weakness in the transports we've seen since the fall. and finally the russell, the small cap index breaking down a few weeks ago. >> i think that the question, the death of the bull market, meaning are we in for more than a 10% correction, are we in for that 20% decline? >> if you're going to talk about a bear market or something longer than just -- you have to understand what actually brought this market up. and so we had this 2008 financial crisis. federal reserve and several other banks came out and did quantitative easing. that blew a $9 trillion debt bubble, which is now starting to come off. it doesn't have to necessarily imploez but when that credit contracts it means the global economy contracts, and so then you get equity markets and currencies and commoditiesing and everything else contracting. so if you believe there's going to be a longer market, a longer bear market, which i'm really leaning to at this point, you're talking about a global deleveraging once again. >> and in terms of global impact we've seen it move beyond emerging markets. >> japan. >> korea, japan, canada's in a

recession. >> but i have to say that to me i don't think any of this is new. and i've been looking at global markets most of my career, and what's been happening in china, for example, last night china printed a pmi number, 49.7. this was a number that was flat right on the screws with the market the consensus expected yet people are talking today about china imploding. so to me the question is did suddenly china fall apart overnight or is this just something people are paying attention to the same time we're contemplating the fed, the same time we're contemplating an s&p at 18 times before the sell-off was kind of expensive. so again, put all these things into your mosaic. that's why this is happening. >> i agree. if you took a look at the e-mini s&p futures overnight, we actually started falling before the china pmi was released. the markets were already maybe anticipating, whatever it was. they were selling off beforehand. but could this be the straw that broke the camel's back so, to speak? >> it could be. i think to timt's point, the companies that were facing china already knew that china's growth really wasn't 7%.

i think the retail investor, the institutional investor more importantly is trying to get their head around 3%, 4%, 5% growth or whatever that growth really is. the fed is boxed in. they cannot raise rates. they will invert the yield curve. growth not there. inflation not there. commodity prices lower. market lower. and i think people are looking at technicals because they don't understand the rest of it and technically we're breaking down. >> by the way, we're taking a look at oil -- oil is now down 10% for the full session as opposed to 8% at the 2:30 p.m. close. we're monitoring this as it's happening live here. >> right. and again, oil and china, these are all symptoms of what's going on. they're not the cause of it. as tim was saying. we've known that china's been slowing down for a while. that's a symptom of credit and global deleveraging going on. oil's another symptom of that. look at raw commodities. look at rubber and lumber and iron ore and steel. there's overcapacity in the economy. it's a natural economic cycle that things start to contract. >> i've listened to all you

guys. it sounds pretty dismal. it sounds kind of awful. do we have to go down to our lows of this most recent sell-off which is 1867 on the s&p 500? and i know that people are thinking 1867 is a long way. that's another day like today. >> the market has ocd. the market is compulsive. the market needs to check and rexhek levels in order to see if they're confident at these level. 1867 is the level to check. but when you look at crude, and i mentioned it last week, mexico hedging 2016 output $49 seems leek a top in crude and that's negative for the market. >> the october 14th low i believe was 1825-ish or so, and we bounced straight off of that. we thought we tested it last week. we're obviously seemingly headed back there. and again, i mentioned one thing about oil. you brought it up. we talked about it on friday and we talked about it yesterday. the one thing we'd sort caution about is the fact that oil volatility was up significantly both on friday on a day when oil went higher and yesterday on a day that oil went higher. today actually makes sense to me

in terms of what happened. >> what do we do in a market today where there was no place to hide, there was not even the typical flight to safety, flight to quality trade that we normally see? tlt basically did nothing on the day. the u.s. dollar didn't do much on the day either. banks got slaughtered today. what do you do? >> you go to cash. i mean, you don't have to make a trade in this market. you don't have to do anything. there's nothing wrong with being prudent and going to cash. as we go throughout the week you need to look at a couple things. we have a few catalysts. we have the european central bank, the ecb. they have a meeting on thursday. if they come out and are extremely dovish that could be a catalyst for higher stock prices. and of course we have non-farm payrolls on friday. that's going to be a little dicier but we do have some cat ligss out there. you don't have to do anything today. >> catalysts are probably to more extreme market reactions. when i think about the ecb and i think about the payroll numbers. remember, if we were contemplating the fed, will they, won't they, the backdrop of that, the assumption is they will because there's proper

growth and that the labor market, you've got a 5.3 unemployment rate. i know about the underemployed rate and i know about wages that are kind of sideways. but the reason the fed is in a conundrum right now is because things are a lot better. there are asset bublsz being created. looking at the market dropping it back into the context these guys were talking about, a lot of people probably thinking fool me once shame on me, fool me twice shame on you. i'm not going to sell disney at last week's lows or apple. or look at ford. auto sales in the united states. best numbers since 2005. so you're in a place here where some stuff is trading wp or people will look at last week's analog and say i need to watch where some of these stocks traded down to or they won't trade down there again. >> okay. let's stick with the markets and specifically the technical levels in the market. the s&p 500 could be in store for a lot more pain ahead. according to this chart. ari wald of oppenheimer is with us now, joins us at the smartboard. ari, what chart is out? what do you see? >> the analogy is this. as an injured athlete needs time to recover before getting back on the field, so does the s&p

500 need more than a few days to stabilize from an eight-month breakdown in trend. here's what we're looking at. and we see a lot of similarities to what played out in 2011. and we're using this road map for now. you can see seasonally as well. both markets peaked in may. they both had this very waterfall-like decline in august when seasonals weakened. and if you look aback at 2011, the market really didn't get going again until october. that required two months of basing along with an undercut of the low. so for the s&p 500 i think the play is indeed whether it happens now or later, a test of that 1867 low that we saw last week, potentially even lower. now, let's look at the sector level. the group we want to have on our buy list here, on our shopping list, are the leaders. and one area that stands out is consumer discretionary. we like the relative trend. here's the sector relative to the market.

we can see it was a leader through the rally. and then once again on this pullback as well the relative strength continued to do well. we want to buy the leaders on the pullback. i think for the spdr it can get back to the lower end of its support range at around $68, $70 support. here's what keeps us up at night, though. we're most concerned about the energy sector and we're concerned that weakness in the credit market within energy spreads throughout the market. on the bottom panel we can see credit spreads within energy continue to widen. and the sector as a whole, the xle, has broken a 15-year up trend. so as a hedge we think this is still a group to sell, short, underweight or simply avoid. >> ari, within consumer discretionary which groups look the best? a lot of people like home builders, they like the dz nis of the world. where do you think they're finding their relative strength within that sector? >> i would stick with some of the more cap weighted names in the group. home depot, amazon.com,

starbucks. these are all names that are rated fundamentally outperform at the firm. they screen positively based on trends and earnings revisions. and they also have an attractive both absolute and relative trend. those are three of our favorite names within krurm discretionary. >> ari, thank you. ari wald of oppenheimer energy is a no touch and looks like we could be in for a couple months of base. tim allude to the notion you that won't want to revisit and sell again at the lows but maybe you don't want to buy at the lows either because you feel like you've been burned. if you don't buy in the lows you may not be in the money at this point. >> that's a trader's conundrum. but at least put a plan in place. you want to take something away. put a plan in place and say the guys mentioned anywhere between 1820 and 1850 on the s&p. let's assume it might get there over the next few days. give yourself five or six stocks you would love to buy, see if the market goes there, see what type of bounce we get if any and

then buy those names. have a plan in place so at least you can fall back on something. not when it gets there you're so terrified and you do nothing. that's paralysis by analysis. >> wow. that's a good one. in terms of the names ari had mentioned or the sector, consumer discretionary he sees growth in. >> lower oil should be better forp consumers. if the market's going to rally that's what you want to be in. i think the last chart he showed is really important where it showed high yield credit spreads. that's why you don't hide out in bonds in this environment. you saw -- >> you mean in treasury bonds. >> treasury bonds. tlt. today tlt should have been up 2%. it should have soared. this is the absolute best environment in the world for bonds. and they were flat on the day essentially. >> why? >> there's a couple different things. one, you have hedging from the energy market. zmub two, you have a big macro trade, a big rebalancing going on. and people are getting out of

it. watch out for tlt. >> be sure to tune in tonight to cnbc's special report "markets in turmoil" with jim cramer, brian sullivan and sara eisen. coming up next, 40% of the stocks in the nasdaq are now officially in bear market territory but there is one name that could soon join that group and that could spell even more trouble for the markets overall. we'll tell you which stock. plus crude oil diving more than 10% today after a record three-day rally, and that's got commodities king dennis gartman out with a very big call. he'll reveal that shortly. later we've got the three names that can case when the selling is over in china. we'll tell what you those are. as we had to break, take a look at the s&p 500 heat map. you see a sea of read with very few exceptions pretty much across the board. much more "fast money" straight ahead. [ male announcer ] andrew. rita. sandy. ♪ meet chris jackie joe. minor damage,

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sell-off. netflix, calling your attention there, the worst performer of that girl. lost just about 8% here. we are now for those shares just shy of bear market territory. down by nearly 20%. seeing its worst one-day decline since october of 2014. those netflix shares down by 8%. then there is of course -- we're just going to throw am'll in there posting its biggest point loss on the dmds 100. it was the biggest drag. it is of course the biggest component here. the overall composite, nasdaq composite is into that correction territory. negative for the year. we're down 10% from the recent highs. chip stocks in particular. we talk about them often here on this show for "fast money." they're back to bear market territory. if you use the smh etf, the semiconductor holders etf. we're down 20% since october. again, 2013. and from its more recent highs you can see the year-to-date chart there. again, semiconductors certainly playing a part in that big carnage of a tech trade as well today, melissa. back over to you guys. >> dom chu, thanks very much. grie adami, what do you make of the carnage in the

semiconductors specifically? >> they've been under -- well, if you want to throw micron in there, micron is trading as if were drm prices were going to zero which may in fact happen at some point. i don't think it's going to happen in the next couple days. this overshoots on the up side and we said it just as well overshoots on the down side. you've got to stay away until those names stabilize. intel had a nice day the other day and it was a lousy tape but that's people just trying to play stock market. the one that sticks out like a sore thumb continues to be qualco qualcomm something's absolutely got to give in qualcomm. i don't know if it's going to be an activist, they split the company up. something's got to happen because this stock has trade poordly for the last almost 18 months. >> qualcomm has china exposure and in a tape like this even if something happens it may not be anything -- >> we thought we'd priced in all the bad news on china in call tomb. a reminder why people are selling qualcomm and a fear the state is out to get them in

favor of the local plays. but you look at qualcomm, 15 -- where did we close? 55 and change today. within 4% of its spike down lows on monday which tells you sentiment in the stock. i think netflix is the place you have to watch, though. this is to me an ultimate barometer for the market in terms of momentum. it's a cult stock. it's a wonderful company in terms of what they're doing. it's a ridiculous valuation. there's a lot of momentum in the stock. you don't hold this stock. >> the thing that would concern me about netflix is this is a winner overall for a lot of people. if we're in a market where people want to get small, they want to limit their exposure, they take their winners. and netflix is a winner. more selling pressure. >> that's the first thing you're going to do. just remember, like tim said, netflix is fine, they do a great thing. valuation very high but now there's competition in the space. these things are ultimately going to starter oeding. >> they should benefit from the skinny bundle. >> nobody's going to care about the skinny bundle. >> i understand. everyone is selling growth. they're locking in profits where

they can. but if there was one beneficiary of all the stuff we see in the wreckage of these cable companies and in a name like disney netflix probably should be in the best seat. >> apple is what concerns me, though. when dom mentions apple is almost in bear market territory that has broader implications for the overall markets, guy. >> i don't know if it has broader implications for the overall market. i think bill fleckenstein mentioned -- >> nasdaq 100. >> i get it. and i think sentiment as well. but if you look apple and the s&p have been mutually exclusive for some time. maybe they're catching up to each other. but as apple goes the market doesn't necessarily goes. i thought bill fleckenstein i thought it's got to be three or four weeks ago put out an interesting bear thesis based on the apple ecosystem. that should be the concern. i understand what your concern would be in terms of the stock. i still think it's got to hold 103 1/2, 104, and you trade it on the long side against that. albeit i think your points are well made in terms of how poorly the stock has been trading. >> still ahead the fear gauge is surging but that could be a good thing if you're worried about

the fed. we'll explain what that means a little later on. you're watching cnbc, first in bid worldwide. in the meantime, here's what else is coming up on "fast." >> announcer: crude oil getting slammed on the back of a record three-day rally. and it's got commodities king dennis gartman making a bold call. plus another painful day on the street. but we've got the three stocks to watch to know when the sell-off is over. all that and more ahead on "fast."

take a look at this. a chart of crude oil ending the day lower by more than 10%. this is after a record three-day run. and take a look at the big integrated oil stocks today all falling off a cliff. exxon, chevron, bp all getting hit very hard. our next guest says that could have big implications for stocks. dennis gartman is the editor of the gartman letter. he joins us now. in fact big implications meaning this is the start of something big here in terms of the decline. >> i think that we're in a very real bear market as far as equities are concerned, and a lot of people tend to look at the energy market, the oil market as being a harbinger of where equities themselves are going to go. and for a while that's been the correct course of action. i do think we're in a real bear

market, we have failed to make new highs. the rallies we've seen in the equities market have been on declining volume. the breaks have been on advancing volume. the breadth of the market has been extraordinarily poor. last week the rally went right at the box, the marking between the 50 and 62% correction. we bounced right into it. and now we're failing again. i'm afraid this is a real bear market and i'm afraid most people are not prepared at all for it. there's been very little public selling that's gone on. i think this is very dismaying. >> what is oil telling us now? what is different about the oil market versus a couple weeks ago in terms of the action? this is certainly not the lows we've seen in crude. so why is it all of a sudden this indicator that we are in fact in a bear market? >> well, first of all, the crude oil market has been in a sustained bear market for the past, what, 13, 14 months. and you had a massive rally. maybe the biggest rally we've seen in the crude oil market's history. 27% from the lows of last monday, or last friday, until the highs of what, yesterday

afternoon. and archly, atypical type of activity. i would have to think at that point that every bank that has lent any money to any enp producer of crude oil was bending their arms to get some hedges put in place. i suspect it's going to be very difficult to get crude oil, wti, much above $52 or $53 a barrel again. i think there will be plenty of hedgers who are going to be forced into selling crude oil at that point. they're going to follow what the mexicans did, which got their oil production hedge for the next year and a half or so. and you're going to see a lot more of that. the banks are going to force them into doing it. if crude oil continues to fall, that will argue that demand is declining. that will argue badly for the economy in general. and i think that that's one of the harbingers or one of the co-relative, or co-extensive indicators of a bear market in the equities market. i'm very bearish of stocks. i hate to say that. it's not fun. as i used to say, bears don't eat. but i'm afraid that's what's going to happen here.

>> are you short this market given your views? >> yeah. i trade only from my own account, melissa. and the only thing that i have on, i'm long some tanker stocks, which interesting enough the tankers were the only stocks that were up across the board today. i'm long tankers because that is some sort of a bet on declining prices of crude oil. but at the same time i am short derivatives to get myself on balance slightly net short of the stock market. not dramatically so. just slightly so. i'd much rather be bullish. it's much more fun to be a bull in a bull market. in a bear market you have to be more careful. but i am slightly net short and have been that way for a while. >> thank you very much, dennis gartman, of the world-renowned gartman letter. it's interesting the point dennis brought up about the banks and exposure to energy. a lot of the bank analysts and investors overall have been discounting the exposure tone ji and the impact it would have to bank portfolios. are we at a point we should revisit that and think maybe there is an impact to financials? i'm thinking this because financials got creamed today. >> financials and energy at one

point financials were down as a sector 3.7%. look, there's no question that the high-yield sector and therefore banks have a lot of exposure to the energy sector. but listen to what we said on the show tonight. i think depending on your view it's very interesting. ari says he's shorting the energy sector and we're basically at the bottom. we rallied 27%, we gave back 10 today but think of where we are in the cycle. u.s. production is starting to decline. you have opec starting to capitulate. dennis says there's a bear market in oil. to me i hear the opposite. i look at the volatility up and down and i look at production levels that are finally coming down. it's been slower to happen but that's my view. >> you just said it. iran's coming around with oil. they sit back out before they even thought about iran coming on that it was worth $15 in the price of crude. we've seen it. have we seen it totally or is it still another 15? i think a short-term top. i know it's a gutsy call but i'm going to say it's 49, 50 bucks a

short-term top and there's probably no safe spots to be buying enj. right now with crude still in freefall. >> it is not often that you see citi down 5% in one session. >> not only do you see citi down 5% -- >> bank of america. >> and you saw blackstone. blackstone is a publicly traded company. i get it. and i have no knowledge of their portfolio. my point has been one can make an assumption that they have some sort of energy exposure that has been hurting their stock since the middle of july. i think that is a ridiculous assumption to make. >> be sure to tune in to cnbc's special report "markets in turmoil." that is tonight with jim cramer, brian sullivan, and sara eisen. 7:00 p.m. eastern time here on cnbc. up next, tim lays out three names to watch that just might indicate the selling is over in china. and later, what do these three men have in common?

they're all a little less rich thanks to the summer swoon. an inside look at how much money they lost in august and the names that tripped them up. you're watching cnbc's special coverage of the market sell-off. fms's back right after this. made sure everyone got their latest ggets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.

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it makes it so much better to do homework when you're at home. internet essentials from comcast. helping to bridge the digital divide. welcome back to "fast money" and welcome to september. steep sell-off today. the dow down 470 points. at one point falling below 500 points. it's now back in correction territory. the dow and s&p having their

worst start to a month since march of 2009. all three of the major indices pulling off their third biggest drops of the year. energy and financials were the biggest drags on the markets today. and check out crude oil continuing its wild series of swings, soaring nearly 9% yesterday and then crashing 10% today. plus the volatility index shooting up above 30, and that could be telling us something about the fed's next move. we'll have more on that later on this hour. all the selling has been driven in part by china growth concerns. so which names are most exposed to the country? dom chu is back in englewood cliffs. >> s&p capital iq crunches some of the numbers here in the many of the stocks in the s&p don't break out regionally or by country what their exposures are. befor the ones that do s&p takes a look at those and take a look at country-specific exposure pevgly to china. among the names that come on their list applied materials, a company that makes the stuff that makes computer chips, gets around their estimates, 18% from china. that's according to their

disclosures. ahavingo technologies, semiconductor company as well, they're trying to buy broadcom. and wynn resorts gets 72% 6 their sales just from macau. the other part coming from las vegas. that's the china exposure, some of the stocks to watch for traders. as to the asia pacific broader, dow chemical, ibm, expediters international, among the stocks that break out the asia pacific region. expeditors international this is a company that does logistics for basically freightgoers, import, export businesses. they get a good chunk of their business from that asia pacific region. just some of the ones, melissa, that traders are watching for the asia pacific exposure. >> third quarter earnings will be very interesting because i'm sure all these companies will mention china, will have a better read on whether or not whatever's going on in the china stock markets is having an impact on demand. >> one name that ibm stands like a sore thumb. that's one name i know we've done a good job in terms of

where the stock is headed. we've said given their growth or lack thereof it should have a 8 multiple against maybe a 14 or 15 earnings per share next year. you can do the math as to where the stock is trading. guess what. that's where it's trading now and probably still some down side in ibm. >> of these names dom mentioned tim what would you stay away from, what would you like? >> i'd flow tiffany. you think luxury goods and japan and they just report ppd we have current thoughts from the ceo. that's trading through the monday lows. >> for more on the weakness in asia and its impact on u.s. stocks let's bring in frederick neumann, the co-head of economics research at hsbc. frederic, it's always great to speak with you. >> good evening. >> for a long time people had been saying what's going on in china and the chinese economy is isolated but yet we're seeing now the evidence that it's not. and it's not just big trading partners like korea where we're

seeing the evidence and the export numbers. we're also seeing in developed markets like japan, with the nikkei down 4% overnight yesterday and then canada is now in a recession. are we now seeing the impact in other markets and is it more concerning to you now that we're seeing the impact in developed markets specifically? >> that's right. the weakness from china is starting to spread and it's going beyond the commodity sector. remember, for the last six, nine months it was commodities that got hit because of weakened china demand. now the worry is that china's also reducing its purchase not just of investment goods but also consumer goods. we're seeing concerns of a slowing purchases of, for example, electronics purchases by chinese consumers. so it's spreading and it's starting to hit some of the more developed markets like japan and korea as well. >> frederic, it does seem like the chinese government is running out of things -- i don't want to say running out of things to do but now they've

arrested up to 200 people to try to figure out or crack down on market volatility. i'm just wondering is it another chinese devaluation in your view off the table? bank of america, merrill lynch had this very interesting note out today saying they could see it. if you believe reports and you believe reports of another 20% on chinese devaluation, u.s. dollar-yuan, then that could be another 25% lower for commodities and it could also mean global contagion in the banking system. >> we think a devaluation is unlikely at this point, partly because of the reasons that you cited, because it's very zrumtdive for the global economy. and yes, the chinese are in a tough spot but they're not entirely oblivious to the challenges of the economy facing as a result of a slowdown in china. but the biggest reason not to expect a devaluation at this point is that if you devalue the currency money flows out of your country and that tightens financial conditions. and the chinese have to ease monetary policy at this time.

they have to cut interest rates further just to get the local economy humming again. exports are a secondary problem at the moment for the chinese. it's all about the domestic housing construction bubble that's deflating, and you have to reflate this. so if you devalue the currency you're actually going to make things worse. we think the chinese are going to hold the line for a moment and maybe offer a bit of a breathing space for other economies. >> so in your view how does this play out, frederic? assuming the u.s. continues along its path, the fed raises interest rates either in september or later on this year, in calendar year 2015 and the ecb continues its monetary easing path. how does the china story play out? >> well, we think on the currency side it should stay stable, but in terms of against the u.s. dollar, but what the chinese really need to do here is add more stimulus to the economy. i know it's not exactly what people want to hear because of their concern about long-term debt, but in the short term it's all about making sure the

economy doesn't sort of -- >> i'm sorry to interrupt, frederic. so more stimulus meaning how are they going to interrupt that stimulus? are they going to issue more debt or are they going to sell reserves? they're selling reserves right now. >> they're going to issue more debt locally. it's all about issuing more bonds. they're going to allow local government entities to issue more bonds. they might even put out sort of a special infrastructure bond program sponsored by beijing. they still have a lot of excess reserves trapped within the banks. they're going to cut the triple rs just to free up that liquidity. at the same time, if you do that, you can't really devalue your currency. you have to keep the currency stable and you're going to add more stimulus both on the monetary and the fiscal side. and you know what? on a daty basis we hear micromeasures being rolled out. we think beijing is currently in crisis-fighting mode. every day we have a new announcement. yes, they were just at the announcement that the chinese don't have to pay as high a down payment on the second home

purchase. this is aimed at the real estate market. so every day new measures are coming out. >> frederic, great to speak with you. thank you for your analysis. frederic neumann of hsbc. just to recap here, no deval on the table. another rrr cut probably. beijing is in fighting mode at this point. >> and xi jinping is also in a place where he's fighting a political crisis. half of what's going on, and people are arguing that the reason he's distracted on the markets and policy toward the economy and markets has been so distracted is he's in fact distracted to keep the communist party in power. all the corruption probes. you talked about the 200 people arre arrested. that's a lot 6 it. to me i think china has a lot more policy options than people think and i think people should have been paying attention to this two years ago but i think there's ways you can play the market if you think china has found a bottom. >> what are the things you're watching -- >> i want to see things that were probably the first round of the china pain and things that are probably starting to bottom or could be bottoming.

that would be rails. that would be ksu. guys that are also global in their nature. but ksu certainly a play on north america. the eem certainly emerging markets had a massive sell-off last month. i thought that was possibly a bottom. it skill could be. and then the aussie dollar which is a levered play on china. it trades below a p 7 hand handle and then starts to bottom. >> what are you watching? >> you've got to watch individual names. micron, it could have been the real tell for us. we watched these semiconductor stocks fade gsh. >> you mean way back when? >> you start to see what lead time they had. they knew something he with didn't know. if and you look at a micron or tivy's or a wynn that dom mentioned before, all these made recent 2014 tops. all of them have cascade lower. they have to rally or at least stabilize before it's safe to get back in. >> beaks. >> for me it's the dollar. it goes back into this entire global deleveraging. if you see the dollar at least stabilize and possibly

strengthen, that's going to give a little boost to u.s. stocks in that things may not be as bad as possible. uup's the ticker for that. >> the russell gave us the notion we were headed lower. i think the russrail will lead outs if it gets to certain levels. if you see outperformance in the iwm you could potentially get an all clear sign in china. >> we had a big day in the markets in the united states. another special report 7:00 p.m. eastern time "markets in turmoil." on all things sell-off related, china, and what to watch ahead of tomorrow's open to git ready. tonight at 7:00 p.m. on cnbc. hedge funds getting whacked in august. could some of their trades haunt them in september too? plus which names traders would be buying with smart money and which ones they wouldn't touch. much more "fast money" straight ahead. ? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought.

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loser down 13 foers for the month. lawrence delavine a friend of fmgs fms. i would imagine there are some very popular hedge fund hotels that a lot of these hedge funders have extracted pain from. >> right. obviously august was a tough, tough month. all you have to do is look at the top holdings of some of these big names you mentioned. big ackman huge holding in valia valiant, down about 10%. dan loeb big amgen stake, down about 16% for august. david einhorn, sunedison down 55%. if you're a stock focused hedge fund and you're net long which is basically everybody, you got tagged if you trade tech, health care, energy, if you do anything rifted to china. it was a tough, you have to month. >> are we getting any signs so far? it's interesting you mex mentioned sunedison. steve cohen had a fleeiling, hi family office. are we getting indications

they're using this sell-off as a buying opportunity to help them in the next month? >> some interesting data from morgan stanley last week. month was the warths day for hedge funds in the last five years. >> monday specifically. >> but it was also the biggest net gieg done by hedge funds in four years. i don't have data on this you about you look at the action today you'd expect another buying opportunity. overall hedge funds still bullish on the economy specifically the u.s. and they're net long. >> this is a snapshot for the month of august. how are they doing for the full year? i mean, august can make or break a year theoretically. >> yeah. there are definitely some sharper verses, third point purchasing a square, omega, green light had sharp reversals and were down for the year but overall analysts say hedge funds are doing treat well. they're down on average 2.9%. they were down 2 pts 9% in august, whlas the snap was down more than 6. and again, they're still up for

the year while the s&p is down. yoefrlt people are happy with them being able to hedge as they're supposed to. >> lawrence delavine of rioters. let look at some of these names. i don't know if anyone wants to touch the big losers or big winners. >> no, i don't. >> in either case. >> either case. one generally speaking i like to have a little homeum on the stocks i'm buying. any of the losers i don't want to buy. we talked about winners potentially with netflix. if these hedge funds are still down. and they moshlly going to get some redemptions what do they want to sell? their winners. b.k. doesn't want to buy this either. >> guy. >> i don't think disney's a broken company. it's a broken stock right now. not to suggest it can't go low grer here but he will figure this out. it's too valuable a property to throw to the wayside.

zbltsinterest. >> it's interesting that baidu. >> baidu had a flash print on monday at 100 bucks where i would load the boats. i'm long the name right now. i remember august 2011 as very well. weighs go into september september was a more difficult month for hedge funds. i'm not sure they have to do anything and they're licking their jobs that i big way. guys are simplified their bucks here. baidu, did growth, very interesting valuation. >> disney i'm personally long on. it was oversold on rs pichlt. >> value to strength index. >> i bought the name i continue to be long the name but it's one of those 2345i78z where everyone knows what they do and people when they name stocks disney always come up. >> be sure to watch cnbc's special report 7:00 p.m. eastern "markets in turmoil." still ahead shouts of go. o supplier ambarella. could that be a sign for quoep rie who's stock has already been

cut in half. the details after the break. plus something that happened today could mean a rate hike is off the table in september. we've got a very special edition of "options action" right after this break. you're watching cnbc, first in business worldwide. much more "fast money" straight ahead. without the internet i would probably be like a c student.

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we've got an earnings alert on gopro supplier ambarella. lower in the after hours as a result. cnbc's josh lipton's got the details out in san francisco. josh. >> reporter: well, melissa, you look at ambarella, that start in the past four weeks was already down about 20% heading into that print. down harder now. just running through the conference call, the company's ceo talking about that the company was pleased with those q2 results. strong sales he talked about for existing markets including wearables. that's gopro which analysts tell me is about a third of this country's revenue. he talked about flying cameras. by that he meant drones. he said that accounts for about 10% of this company's revenue, customers there include drone companies like dji. spang head, though, q3 revenue guide of 90 to 93 pl million. the street was looking for more like 92 million. ambarella, he said, drones are going to continue to expect to grow but he said wearable camera

revenue will be down sequentially and year over year. he chalked that up to product timing, gopro announcing that new camera this summer usually would come in the fall. as for china no surprise, lots of questions about that on the call. ceo, cfo simply saying ambarella continues to monitor the economy in china, that the chinese customers have talked to the economy about what they called uncertainties in the marketplace. and finally, we do want to mention competition. analysts who follow this company on the street do think you're going to see qualcomm enter the drone market. however, the ceo on the call saying at least right now the competitive landscape has not changed at all. melissa, back to you. >> josh lipton, thanks so much. ambarella, who wants to trade that? >> let's trade gopro because ambarella's trading 82. gop gopro, if you look at the last quarter it was a pretty significant quarter. i thought it was a great quarter. and the stock acted in kind. then the market got in the way. tim's been all over this. what does it mean now? to me it means the $37 low we

made back in march is spot in the crosshairs. i think if it gets there, holds, you buy it for the bounce. >> by the way, this is a new low for gopro, down 55% from all-time highs. >> i think you have to lean on it. i would not necessarily say you have to short it here although i think it stock is going to fizzle on its own with a very high valuation. a lot of good news. it's a long way away from the holiday season in terms of what numbers we're going to get out of these guys. i think the stock changes at least with a 3 handle, possibly all through. >> i wouldn't cutch gopro all this point. >> how about ambarella? >> ambarella looks like it's caught between the 100 day and 200-day. it has to stay around that 200-day, which is 77.68. it has to stay at that level. so you've got some room there. >> shifting gears here, surge in the vix has got traders running scared but that might point to the fed sitting on the sidelines when it comes to raising rates. mike kuo's in austin with the options action. what do you see? >> this is interesting. i don't think the fed has been weighing the vix very heavily in

their calculus on whether to raise rates. but you go back to 1990 and take a look at the three rate hike cycles they've engaged in we've never seen a rate hike cycle commence with 2109. that took place in june of 1999 and actually the only time we've seen a rate hike of any type during the discount rate on may 19th of 2000 or the fed funds rate of the 16th of that same month was with the vix at 25 or lower. so with the vix this high which usually accompanies sharply declining stock prices and increasing investor anxiety, one wonders whether that's sort of enkapslighting a lot of the other inputs they would use and that would suggest we're not going to get a hike this september. >> i think a lot of the fed officials specifically stanley fischer had left the door open saying they're going to monitor market events and volatility as one input -- >> it's one input. but remember, markets reflect everything else and that's what

mike's getting at. markets reflect what's going on in the world. yes, when you have higher volatility, generally speaking you have an economy, at least in the u.s., that may not be doing as well. >> for more "options action" check out -- mike, thank you. check out the full show 5:30 p.m. eastern time on friday. coming up on "mad money" tonight, cramer is offering you a crash course on what to buy, what to sell and how to read the market's big drop. we'll talk tactics to help you drop the championship team for your portfolio and answering your questions on oil. all that and much more tonight on "mad money." and of course a big day in the markets here. you want to keep it on cnbc after "mad money." "markets in turmoil," our special report, is tonight at 7:00 p.m. eastern time. we're going to get you set up for tomorrow's open. again, 7:00 p.m. here on cnbc. and still ahead -- the traders will tell you what they're watching tomorrow right after the break. stay tuned.

triple-digit declines across the board. crude oil is getting creamed. is this the most of opportunity or a sign the bears are totally in control? you're in luck because i've got what you need to know right now. "mad money" is next! big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy.

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ibm analytics is working to make education smarter every day. welcome back to "fast." the worst start to a september in 13 years. there's a look at the dow heat map and nothing escaped the pain today. everything in the red. the dow of course ending the day lower by 470 points. and that move allows a perfect

time for a cnbc special report "markets in turmoil." tonight 7:00 p.m. eastern time. you've got to watch that. jim cramer, brian sullivan, sara eisen. 7:00 p.m. time now for the final trade. what are you watching ahead of tomorrow's big open? tim. >> i'm definitely watching the high momentum nasdaq names because that was where the pain was today. i watched netflix because that to me is the poster child. that traded down to an 85 print on monday of last week. it closed at 105. there's a lot of room for this to fall out of bed. if markets rally it will fall hardest. >> grasso. >> if you're thinking about buying this market on this sell-off, the names you're looking at have to hold today's lows. i am specifically looking at, easy for me to say disney 9915. 99 spot 15. >> beakers. >> for me it's tlt. today tlt should have absolutely soared. it didn't. something is wrong. narkt is ripe for a crash. >> ripe for a crash. wow. >> you guys make great points. i'll add one. >> cogent. >> yes. the lvx. that's been telling you

something all along. oil volatility index. >> come on, guy. >> thanks so much for watching. see you back here tomorrow at 5:00 for more "fast money." meantime, done go anywhere. "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. 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 want fewer days like today. my job is not just to teach you, but coach and educate you. call me at 1-800-743-cnbc. or tweet me @jim cramer. on days like today, will you let yourself be controlled by your emotions or will you stay calm and be guided by reason? are you