'Fast Money' Recap: Oil's Sheen

Stockpickr Staff

Margin calls at hedge fund Carlyle group and bullish outlook on the subprime crisis from Standard & Poor's left U.S. stocks undecided which way to go Thursday. The Dow was up 0.3%, the S&P 500 rose 0.5% and the Nasdaq climbed 0.9%

On CNBC's "Fast Money" TV show, the traders looked at high-volume trading in Bear Stearns (BSC - Cramer's Take - Stockpickr). Pete Najarian said that he didn't know if Bear was seeing a bottom, but noted that it traded 70 million shares by the end of the day, which he called incredible volume. He said there was capitulation in the market.

Guy Adami suggested getting long Goldman Sachs (GS - Cramer's Take - Stockpickr) with a stop at Tuesday's low.

3 Stocks I Saw On TV

On the default and margin call at Carlyle Group and S&P's bullish forecast, Karen Finerman said there likely remain a few bombs related to subprime paper; she expressed skepticism at S&P's outlook, saying the firm missed the beginning and the middle of the crisis, so it's unlikely it'd be able to call the end. The bad news from Carlyle has mostly been digested.

Joe Terranova said the Federal Reserve has indicated it understands the market is deleveraging. It wants to make sure that the deleveraging process is orderly, he said. He is not a seller of U.S. stocks here, but is instead a patient buyer.

Najarian said it is still a trading environment and investors should buy dips and sell rips. He noted that the S&P 500 touched 1282 and held twice. He said the index has to bust through 1330 before a real run can begin.

Terranova said that in commodities, the oil trade would continue to work through next Wednesday. Adami noted that Newmont Mining (NEM - Cramer's Take - Stockpickr) rose 5% on the day. He recommended getting long the streetTracks Gold (GLD - Cramer's Take - Stockpickr) ETF instead.

He also likes Nucor (NUE - Cramer's Take - Stockpickr), U.S. Steel (X - Cramer's Take - Stockpickr) and Freeport-McMoRan (FCX - Cramer's Take - Stockpickr). Terranova said he likes Freeport as well and also recommended Southern Copper (PCU - Cramer's Take - Stockpickr).

Najarian said that if the Oil Service HOLDRs (OIH - Cramer's Take - Stockpickr) reaches $170, it's a buy. If it hits $177, sell it, he said. Burlington Northern Santa Fe (BNI - Cramer's Take - Stockpickr) has been similarly tradeable, he said. Adami recommended natural gas plays as well. He likes XTO Energy (XTO - Cramer's Take - Stockpickr) and Apache (APA - Cramer's Take - Stockpickr).

Najarian expressed enthusiasm for massive insider buying by Chesapeake Energy (CHK - Cramer's Take - Stockpickr) CEO Aubrey McClendon. McClendon has increased his stake in Chesapeake by millions of shares each time he's bought in the past several years, Najarian said.

Terranova said that the natural gas play is a real story because of supply concerns.

Chrysler said it would cease production for two weeks this summer. Adami said that BorgWarner (BWA - Cramer's Take - Stockpickr) was the best way to play the auto sector.

Amgen (AMGN - Cramer's Take - Stockpickr) shares traded wildly on a mixed bag of news today. Najarian said today was good for Amgen because nothing had been working for the company in the past couple of years.

In home retail, Najarian said Lowe's (LOW - Cramer's Take - Stockpickr) had been beaten "with the ugly stick." Adami said he believes Home Depot (HD - Cramer's Take - Stockpickr) could run to $30.

Electronic Arts (ERTS - Cramer's Take - Stockpickr) announced today its takeover of Take-Two (TTWO - Cramer's Take - Stockpickr) was turning hostile. Finerman praised Electronic Arts' move, saying Take-Two has 10 days to respond, and shareholders will get more information about Take-Two's merger situation.

In after-hours trading, Zumiez (ZUMZ - Cramer's Take - Stockpickr), a snowboard retailer, popped higher on an earnings beat.

To discuss the commodity trade, the "Fast Money" crew welcomed Dennis Gartman, publisher of The Gartman Letter. He advised against buying gold at $1,000 an ounce, and said instead to wait for pullbacks. He recommended getting long wheat, corn and soybeans. Agricultural commodities are a play on U.S. ethanol policy, he said.

He predicted the bull run in Potash (POT - Cramer's Take - Stockpickr), Monsanto (MON - Cramer's Take - Stockpickr) and Mosaic (MOS - Cramer's Take - Stockpickr) would continue.

Gartman lamented the Bush administration's policy of expanding strategic oil reserves. He called continued buying of reserves reckless. Terranova said that China is building a reserve of its own, which could squeeze supply dramatically.

Analyst meetings this week take on added importance as investors look for news in a volatile market. Najarian said that investors want to know what's going on with their investments. He pointed out that news of capital expenditures from Exxon Mobil (XOM - Cramer's Take - Stockpickr) and Chevron (CVX - Cramer's Take - Stockpickr) maid oil service companies jump.

Adami predicted good news from DuPont (DD - Cramer's Take - Stockpickr). He said that the company has changed its business such that 20% of revenue now come from agriculture. He called it a cheap ag play, and said he likes its dividend.

Najarian said he liked Genentech (DNA - Cramer's Take - Stockpickr) because of news about Avastin. He said the Amgen story builds into a bull case for the stock. Both companies are still well off their highs, he said. He said that Aetna's (AET - Cramer's Take - Stockpickr) conference call would likely move the market a great deal.

There will be new consumer price index information tomorrow. Finerman predicted high inflation, which she said can't be good for the consumer and can't be good for the Federal Reserve. She recommended the iShares Lehman TIPS Bond (TIP - Cramer's Take - Stockpickr) as a way to get long inflation. She said the fund had no exposure to credit or bond market madness.

Adami said that the market could have washed out today but didn't. He said that if the inflation number isn't too bad, which he doubts, the market could be up substantially tomorrow. Terranova agreed.

Trader Radar

Carnival Cruise Lines (CCL - Cramer's Take - Stockpickr) traded at unusual volume today.

We Ain't Dead Yet

David Swanson, CEO of R.H. Donnelley (RHD - Cramer's Take - Stockpickr) appeared on the show to contest a previous "Fast Money" segment that alleged the death of Yellow Pages, the publication his company sells.

There's a lot of misperception of use of Yellow Pages, he said. He acknowledged that use is declining but pointed out that use of phone books is still prevalent. He said his company has diversified online, which should help build revenue. Finerman pointed out the company's substantial debt, and said "You can't own it."

Fast Messages

One viewer wrote in to ask about Garmin (GRMN - Cramer's Take - Stockpickr). Najarian said that the navigation device company seems to have a real issue. He recommended puts. Finerman said that if the company's acquisition of Navteq (NVT - Cramer's Take - Stockpickr) blew up, it would probably be a positive for Garmin. She said she'd be closer to going long purely on a valuation basis.

A second viewer asked if margin calls on leveraged hedge funds signaled capitulation in the market. Adami said he thinks the banks are close to capitulation. The best balance sheets survive, Terranova said.

Final Trade

Terranova selected Calpine (CPN - Cramer's Take - Stockpickr). Adami chose Home Depot. Finerman picked Goldman Sachs. Najarian went for Genentech.

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