By Roberto Pedone
Posted on July 9, 2009

The traders of CNBC’s “Fast Money” are cautious about U.S. equities now that the S&P 500 has dropped to its lowest level in 10 weeks, with rumors of a second government stimulus plan raising fears on Wall Street that the economy remains in rough shape.

Joe Terranova told viewers that the market is all about earnings now that the reflation trade is over. He said the play now is to be flat heading into earnings but not short.

Karen Finerman isn’t surprised that stocks are moving lower considering how dramatic the move higher was.

Tim Seymour said it’s a negative indicator that the S&P 500 broke below the 200-day moving average. He thinks that the S&P could trade all the way down to 830.

Guy Adami thinks a move down to 830 is a good thing in the long run. He feels a drop to that level will allow investors to get back into the market.

The “Fast Money” crew has recently highlighted trading ideas that play off of defensive stocks, health care reform stocks and stocks with unusual options activity. Here are some highlights from over the past week as aggregated from the show.

Fast Money’s China Trades: China is red hot, with its stock market hovering around its highest levels in about a year. How should you play the Far East? On last Wednesday’s “Fast Money” show, Pete Najarian told viewers: “I like Peabody (BTU) as a trade here. The company is expecting exploding export growth to Asia and the Pacific.” Fast Money’s China Trades include Yingli Green Energy (YGE) and Suntech Power Holdings (STP).

Fast Money’s Health Care Reform Stock Plays: How should you trade the healthcare sector now that President Obama is pushing hard to reform the entire industry? On last Wednesday’s “Fast Money” show Jefferies analyst, David Windley told viewers: “Investors need to take into consideration the continued shift toward generics as part of the equation. The best way to play lower cost drugs is through Teva Pharmaceuticals (TEVA).” Fast Money’s Health Care Reform Stock Plays include Elan (ELN) and Paraexel (PRXL).

Fast Money’s Options Action: The traders have noticed some unusual options activity in a number of stocks. On Monday’s “Fast Money” show, Jon Najarian told viewers: “I think Petrohawk Energy (HK) is a buy due to an unusually high volume of call activity.” Fast Money’s Options Action includes Alcoa (AA).

Fast Money’s Rising Stock Stars: In a segment called “Rising Stock Star,” the traders reveal their favorite rising stocks. On Monday’s “Fast Money” show, Karen Finerman told viewers: “At 10 times earnings, Children’s Place (PLCE) is attractive, and the company has $6 a share in net cash on its balance sheet.” Fast Money’s Rising Stock Stars include Geron (GERN) and Trina Solar (TSL).

Fast Money’s Defensive Stock Picks: The traders have noticed that defensive stocks are starting to act strong in a weak market. On Monday’s “Fast Money” show, Tim Seymour told viewers: “My play is slightly downstream. I’m looking at Bemis (BMS), which is the company that packages foods for companies such as General Mills (GIS).” Fast Money’s Defensive Stock Picks include General Mills (GIS) and Kraft (KFT).

Fast Money’s Plastic Trades: Recently, Stifel Nicolaus upgraded credit card issuer American Express (AXP) and said the firm was the least exposed to new rules come for the credit card complex. On Monday’s “Fast Money” show, Guy Adami told viewers: “As far as I’m concerned, charge-offs are trending the wrong way. I’d rather own MasterCard (MA) on a valuation basis.” Fast Money’s Plastic Trades include Visa (V) and Bank of America (BAC).