'Fast Money' Recap: Going Over Google

Stockpickr Staff

The Federal Reserve slashed rates by 50 basis points on Wednesday, bringing the fed funds rate to 3%. The Dow was up triple digits intraday, but closed the trading session down 37 points. The Nasdaq finished down 9 points and the S&P 500 closed down 6 points.

Water was thrown on the post-Fed rally after Fitch Ratings downgraded FGIC, Ambac(ABK Quote) and MBIA(MBIA Quote).

Guy Adami told investors to buy bank stocks like Wachovia(WB Quote) on any dips.

3 Stocks I Saw On TV

Pete Najarian mentioned he bought a downside put and sold an upside call on the Financial Select Sector SPDR(XLF Quote) Wednesday. Jeff Macke hopes the Fed will just go away for a while and let the market work.

Starbucks(SBUX Quote) fell 1% after hours as the coffee giant lowered its profit forecast. Macke likes the job CEO Howard Schultz is doing, and he would buy the stock at $18. Adami likes McDonald's(MCD Quote) for a buy around $50.

Amazon.com's(AMZN Quote) fourth-quarter profits soared, but shares fell 11% after hours on margin concerns. Macke explained that the numbers were better than so-so, but in this market everything is being taken down.

Eli Lilly(LLY Quote) and the government are in talks to explore a settlement over the marketing of Zyprexa. Najarian explained that LLY made a ton of money off Zyprexa, and the firm will likely continue to fight for a settlement. He would continue to avoid the big pharma names because of the negative press surrounding many of the firms. Adami likes Merck's(MRK Quote) valuation and he would be a buyer.

Google Earnings Trade

Google(GOOG Quote) is set to report earnings Thursday after the market close. What is the trade? Adami explained that this is the first quarter that Wall Street firms have downgraded the stock ahead of the earnings report.

He believes the stock is setting up as a technical trade to the long side, but it could drop 50 to 75 points if Google says anything bad. Macke says he doesn't like the tape here nor Google. He explained that no matter what Google says, it will probably go down. Najarian says Google could surprise Wall Street, and he likes the stock ahead of the report. He says the best way to play Google is to put on a call options spread.

Dividend Trade

A dividend increase doesn't always mean that the financial standing of a company is in great shape. Finerman highlighted four companies that raised their dividend and then went down big after the hike. MBIA hiked then went down 78%, Ambac fell 86%, Northern Rock fell 89% and New Century Financial(NEWCQ Quote) fell 99%. Finerman says the dividend increase from Lehman Brothers(LEH Quote) doesn't mean much. She disclosed she is staying short LEH with put options. Adami was very skeptical of the timing of the Lehman dividend increase and stock-buyback announcement in front of the Fed meeting.

Chartology

The "Fast Money" crew was joined by Jason Pestricelli of TD Ameritrade and Dennis Gartman, founder of The Gartman Letter. Pestricelli explained that the S&P 500 futures were moving down in after-hours trading on heavy volume. He says this indicates that Thursday's open will be lower for the stock market.

According to Gartman, the Fed has given up completely on fighting inflation with Wednesday's rate cut and is only concerned about fighting weakness in the economy. He feels that the Fed's actions are terribly bearish for stocks going forward. Gartman disclosed he is long gold, long JPMorgan Chase(JPM Quote) and short high-tech names like Amazon.com and Google. He also mentioned he likes natural gas here and he is short crude oil. Adami likes natural gas play Apache(APA Quote) around $94.

Pops and Drops

Pops: E*Trade Financial(ETFC Quote) traded up 10%. Walt Disney(DIS Quote) traded up 2%. Macke explained that during a recession, it's not a great time to be long DIS. Honda(HMC Quote) traded up 4%.

Najarian says U.S. sales are strong for HMC. Pacific Ethanol(PEIX Quote) traded up 11%. Macke says take your profits; this stock is last year's fad. Boeing(BA Quote) traded up 2%. Adami thinks BA has a cheap valuation and the stock is a long-term hold. Crocs(CROX Quote) traded up 6%. Finerman likes the stock, and she disclosed she is long and hanging on to it through earnings.

Drops: Eastman Kodak traded down 3%. Adami says margins are lousy at EK, and investors should avoid the stock. Tesoro(TSO Quote) and Valero(VLO Quote) both fell 2%. Finerman says take some profits; these stocks have had a huge run. Align Technology(ALGN Quote) plunged 14%. Najarian explained that if the U.S. economy is slowing, then people will cut back on straightening their teeth.

Trader Radar

Tupperware(TUP Quote) traded almost five times its average daily volume Wednesday.

Final Trade

Macke would sell the Retail HOLDRs(RTH Quote) Thursday. Adami favors Public Service Enterprise Group(PEG Quote). Finerman recommends Altria Group(MO Quote). Najarian likes E*Trade Financial for a trade Thursday.

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