NEW YORK (TheStreet) -- The broader market was able to rally Friday and close in positive territory.
Guy Adami, managing director of stockmonster.com, said the historically high margin debt levels could be a warning sign there are too many longs in the market. He added that it would be healthy for the S&P 500 to have a meaningful correction down to the 1,670 level.
Tim Seymour, managing partner of Triogem Asset Management, said the bearish sentiment hit its lowest level since 2005, suggesting participants are a little too bullish.
Brian Kelly, founder of Brian Kelly Capital, pointed out the Russell 2000 got hit hard for the third straight session while the S&P 500 held up fine, which could be a cause for concern.
He added the broader market is two standard deviations above its long-term trend, suggesting that we're getting "toppy."First Solar (FSLR) was up 18% on Friday. Ben Kallo, an analyst at R.W. Baird, was a guest on the show and said the stock had a high short-interest and needed to play catchup after severely lagging some of its peers. He added the solar industry is not in a bubble and his favorite pick is SunPower (SPWR). Seymour said he likes SunPower because of its fundamentals and strength in emerging markets. He also likes Trina Solar (TSL) because of its valuation, fixed oversupply issue and profitability. Kelly said investors currently long Berkshire Hathaway (BRK.B) can hold the stock, but he would not recommend initiating a new position. Cliffs Natural Resources (CLF) was the first stock on the show's "Pops & Drops" segment. Seymour said China's strengthening PMI data is pushing higher stocks that have exposure to that country. D.R. Horton (DHI) fell 6% this week and Kelly said he would avoid the stock for now. Lululemon Athletica (LULU) dropped 8% this week and Adami said he would be a buyer at $65. Michael Kors (KORS) reports earnings next week. Adami suggested investors wait for the results before establishing a position. Up 379% this year, Tesla Motors (TSLA) will also report earnings next week. Stuart Frankel's Steve Grasso said margins will be one of most the important metrics to watch for. Groupon (GRPN) will report on Thursday. Kelly suggested investors do a stock replacement strategy by taking profits in the common stock and replacing it with long call options. InvenSense (INVN) reported good earnings, but came up short on guidance. Behrooz Abdi, president and CEO, was a guest on the show and said the weaker-than-expected gaming industry is weighing negatively on the business. He added that the Android market is doing well and is where his company continues to gain market share. He hopes Apple (AAPL) will be a customer in the near future. Seymour said the stock is reasonably priced, and Apple isn't a crucial customer for the company to succeed. Adami said the stock has technically made a double bottom and a double top, so he suggested buying the mid-point, near $15 per share. For their final trades, Grasso is buying Hewlett-Packard (HPQ) and Kelly said to buy protection in the form of SPDR S&P 500 Trust ETF (SPY) puts. Adami is buying Legg Mason (LM) and Seymour said to take profits in Gerdau SA (GGB) and Companhia Siderurgica Nacional (SID). -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell Follow TheStreet.com on Twitter and become a fan on Facebook.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts