'Fast Money' Recap: The Rally Continues

The bulls had their way again on Wall Street on Monday as the markets responded favorably to President-elect Barack Obama's ambitious infrastructure plans and the movement toward a bailout resolution for the beleaguered automakers.

The Dow Jones Industrial Average rose 298.84, or 3.5%, to 8934.26, while the S&P 500 jumped 33.63, or 3.8%, to 909.70. The Nasdaq was up 62.43, or 4.1%, to 1571.

Dylan Ratigan told the panel that the big news on the automaker rescue plans is that the federal government is considering granting the bailout in exchange for warrants to assume a 20% stake in the companies. In effect, this would put U.S. taxpayers ahead of shareholders and creditors.

As a result, Guy Adami said he didn't know whether investors "can be long on the common equity now."

Ratigan found no disagreement among the panel in his remarks that the tradeoff being here is the sacrifice of shareholder equity for maintaining employment levels and operations of the carmakers.

Jeff Macke said the action merely forestalls the "inevitable": "the equity going to zero."

Adami wondered whether the question that should be taken up at this point is whether there should be an auto industry in America.

Ratigan shifted the discussion to the stock market, which continued to move to higher ground after rallying at the end of last week.

Adami said he liked the "tremendous trading action" today and predicted the S&P will go up another 100 points if it stays above 900.

Tim Seymour credited the rally to extremely oversold conditions. And Pete Najarian noted the VIX volatility index is down to 60 but he's not seeing the speculative pullback that he's been normally seeing.