'Fast Money' Recap: It's in the Charts

Stockpickr Staff

The first trading day of December offered little in market action. On Monday the Dow finished down 57 points and the Nasdaq fell 23 points. The team at CNBC's 'Fast Money" looked to the charts for answers as well as getting Dennis Gartman's opinion.

Chartology with Barry Ritholtz

Barry Ritholtz, Director of Research at Fusion IQ Research, joined the "Fast Money" crew to discuss what a technical analysis of the market tells him. According to Ritholtz, the trend is your friend on the 5-year chart of the S&P 500. Until it breaks the trend line, he would stay long. Ritholtz likes the charts on State Street(STT) and Stanley(SXE). Guy Adami agrees with Ritholtz on State Street.

(Read more by Barry Ritholtz at Real Money.com Five Stocks for Playing a Recession Safely.)

Gartman's View

Dennis Gartman, author of The Gartman Letter, was a guest on the show and shared his take on the markets. Gartman was very impressed on Monday that gold went up even as the dollar got a bit stronger. He suggests that investors buy things that are going up when the news is bearish. An example of that right now would be gold.

Gartman is also worried about American oil firms getting hit with new taxes after the 2008 elections. He disclosed that he is short ConocoPhillips(COP) and Exxon Mobil(XOM) and long Petrobras(PZE).

Gartman is long grain and grain companies like Monsanto(MON) and Potash(POT). On the other hand, he is very short retail stocks like Coach(COH), Tiffany(TIF) and Harley Davidson(HOG).

Consumer Mind

If you're looking for the winning stocks in the retail sector, the best way to figure out which companies is by going inside the consumer's mind. Jeff Macke suggests looking for companies that build a relationship, connect and earn respect with consumers. He feels that companies like Target(TGT), Costco(COST), Disney(DIS) and Wells Fargo(WFC) are very well connected with their customers.

Karen Finerman thinks Wal-Mart(WMT) meets Macke's criteria. Guy Adami favors Saks(SKS) and Tiffany's(TIF). Pete Najarian likes the way that McDonald's(MCD) is run.

Word on the Street

Vivendi(VIV) cut a deal to take control of Activision(ATVI). Macke wishes that ATVI would have held out for a better premium. Also, he offers looking at Take-Two Interactive(TTWO) and THQ(THQI) as potential takeover targets.

Agrium(AGU) announces its buying UAP Holdings(UAPH) for $2.65 billion. In Najarian's opinion, this deal took the entire agricultural sector higher and demonstrates that the global growth story is still alive.

Najarian noted unusual options activity in solar stocks like LDK Solar(LDK), Trina(TSL) and SunPower(SPWR). He disclosed that he bought call options on Trina Monday after noticing the heavy trading in the options.

Chico's(CHS) and Guess(GES) are set to report earnings after the bell on Tuesday. Macke warns investors not to pick the bottom on specialty retailers like Chico's. Teen retail is the hot place to be for a speculative trade and he would get long Guess.

Warren Buffett's Berkshire Hathaway(BRK.A) announced plans to buy $2.1 billion in TXU junk bonds from Goldman Sachs(GS). Najarian remarked that these are not junk bonds and Buffett will do very well.

(Take a look at Buffett's holdings on Stockpickr.com Warren Buffett.)

Speculation hit the market that Nike(NKE) might be looking to buy Adidas. Najarian thinks that Nike would like to get into the soccer market and Adidas would be a great way to do it.

General Motors(GM) falls 4% after November sales disappoint. Adami declared the car industry is a mess. The only stock he would play in the space is BorgWarner(BWA).

Genentech(DNA) falls 4% after the FDA looks to get a second opinion on breast cancer drug Avastin. Najarian says the problem is that Avastin slows cancer but doesn't extend the cancer's patient life.

Happy 52-Week High Deckers Outdoor(DECK)

Pops & Drops

Pops - Netflix(NFLX) traded up 3% after Piper Jaffray upgraded the stock. Macke advises investors to sell the pops on NFLX.

Novo Nordisk(NVO) traded up 4%. Najarian pointed out that this stock continues to pop on positive news for one of their diabetes drugs.

Sears Holdings(SHLD) traded up 5% after Chairman Eddie Lampert defended the company. Macke declares there's no reason to own SHLD because they just aren't good retailers.

Lennar(LEN) traded up 6% after the homebuilder sold land for $525 million that was originally valued at $1.3 billion. Adami commented that there are better homebuilders to own then LEN.

Drops - E*TRADE(ETFC) fell 11% after a Bank of America analyst cut the stock to a sell rating. Per Macke, run away.

Research In Motion(RIMM) fell 8% after a Morgan Keegan analyst downgraded the stock based on valuation. Najarian noted that RIMM has gone up too fast and now analysts are downgrading it.

Verifone(PAY) fell 46% after the firm reported account errors that took profits down 80%. Adami predicts PAY will be on the drops list all week.

Big Lots(BIG) fell 6% after a Wedbush Morgan analyst cut her price target on the stock. Finerman loves being short Big Lots.

Fannie Mae(FNM) fell 6% after a Goldman Sachs analyst cut the stock to sell. Finerman remarked that Goldman is being mean because they can.

Final Trade

The team gives its best trading ideas to viewers.

• Macke would buy THQ(THQI) off of the Activision takeover.
• Adami suggest shorting the Dow with Short Dow30 ProShares(DOG).
• Finerman recommends retailer Kohl's(KSS).
• Najarian prefers U.S. Bancorp(USB) as a play on Warren Buffett.

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