'Fast Money' Recap: Connecting Flights

The trading panel discusses potential merger activity among the airlines.
By Mike Taylor ,

The U.S. stock market managed to squeeze out some gains after a tug-of-war between the bulls and the bears. The Dow climbed 0.4%, the S&P 500 added the same percentage, and the Nasdaq gained 0.2%.

On

CNBC's

"Fast Money" TV show, Jeff Macke said investors tried to break oil earlier, but a bull market finds an excuse to go higher. He said the news that drove oil higher today was activity by Nigerian rebels. He said that shows that the trend in oil is up.

Guy Adami said that

AMR

(AMR)

looks good on the long side. He also pointed out that several airlines are in further merger talks. The traders then observed a

Wall Street Journal

report of talks between

UAL

( UAUA) and

US Airways

(LCC)

3 Stocks I Saw on TV

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Pete Najarian reminded viewers that natural gas and coal are still winners. He said to keep an eye on

Alpha Natural Resources

(ANR)

,

Consol Energy

(CNX) - Get Report

,

Massey

( MEE)

Eastman Chemical

(EMN) - Get Report

and

Sasol

(SSL) - Get Report

.

He also pointed out that

First Solar

(FSLR) - Get Report

and

Energy Conversion Devices

( ENER)look good despite talk from Germany about cutting aid to the solar sector.

Najarian said for a recovery in airline stocks, he thinks oil needs to make a large-percentage pullback. Macke said a rally in the airlines is a selling opportunity.

Chemical Reactions

Management at

Dow Chemical

(DOW) - Get Report

announced it was raising prices 20% amid what it called a crisis in material costs. Najarian recommended

DuPont

(DD) - Get Report

because it has agriculture and solar exposure.

Adami said DuPont is diversified. He recommended a long-side trade in DuPont with a stop out below $46.75. He said he loves the company.

Financials Flattened

The financials sector got clobbered today. Finerman expressed her concern over continued problems at

AIG

(AIG) - Get Report

. She said it's not worth her trouble to figure out what's going on at AIG, and she'd rather play

Citigroup

(C) - Get Report

or the

Financial Select Sector SPDR

(XLF) - Get Report

.

Najarian noted put activity in the XLF, then

Lehman Brothers

( LEH), then

Bank of America

(BAC) - Get Report

. He said that most recently,

Legg Mason

(LM) - Get Report

has experienced heavy put action.

Macke suggested waiting for a big-volume day in the banks before buying.

A Stylish Move

Shares of

Ralph Lauren

(RL) - Get Report

made a big move up today. Macke said the market is about expectations, and Ralph Lauren did better than expected. He said this has been normal for the retail sector. Adami said he thinks the easy money is over in Ralph Lauren. Finerman said she sold some Ralph Lauren today.

Adami said that if energy prices stabilize,

UPS

(UPS) - Get Report

might be worth a look.

Billionaire investor Carl Icahn bought shares of

Amylin

( AMLN) today. Najarian Icahn's position is up to 6.5% of the company. He said he's a buyer alongside Icahn.

The traders then observed insider buying at

Home Depot

(HD) - Get Report

. Adami said the insider bought $91 million of stock. He said he likes the name here.

During the show news emerged that

Yahoo!

(YHOO)

CEO Jerry Yang said

Microsoft

(MSFT) - Get Report

has an interest in buying the company and Yahoo! is listening. Macke cautioned Microsoft CEO Steve Ballmer against buying Yahoo!. Finerman said Yang has no choice but to listen to Microsoft.

LUV Notes

The traders then welcomed

Southwest Airlines

(LUV) - Get Report

CEO Gary Kelly to the show to discuss his successful hedging of oil prices. Kelly said the company is currently more than 70% hedged at $50 a barrel. He said that in 2009 the company will be 55% hedged at $55 a barrel. He said Southwest as a decent position going through 2012. He said he didn't think the company would sell its hedge positions to upgrade its fleet, because it's dependent on its hedges and cash to safeguard against higher energy prices.

Macke said Southwest is best of breed but said the airlines aren't a good place to play. He did praise Kelly for being an excellent CEO. Adami said that the airlines are trading vehicles and as such he recommends playing volatile stocks like AMR. Najarian said the beaten-up airlines will recover the most.

Home Sickness

The traders discussed the possibility that dangerous subprime paper could spread to regional banks. Finerman said that many regionals got priced out of the single-family mortgage market because other companies like Countrywide were originating mortgages. She said after that many banks expanded their construction loan exposure, which turned out to be a bad move.

Adami said the trend illustrates how good a company

USBancorp

(USB) - Get Report

has been. He said the stock hasn't moved much but investors have been collecting a 5% dividend. He said he believes the stock will rise when the credit crisis clears up.

Najarian said he likes USBancorp but doesn't see a lot of upside.

We're Getting Dell

Stacey Gilbert, chief options strategist at Susquehanna Financial, joined the show to talk about

Dell's

(DELL) - Get Report

earnings report pending tomorrow. She said the options are pricing in a 7% move. She said that's twice as big a move as has been typical over the past two years. She said the prefers other stocks, such as

Corning

(GLW) - Get Report

and

Apple

(AAPL) - Get Report

.

Najarian said Gilbert is right. He said he also likes

Akamai

(AKAM) - Get Report

.

Macke said Corning is a good long-term investment and said Dell's not that exciting.

The biotech sector is anticipating a big weekend for cancer drugs in the ASCO conference. Investors can expect big news from

ImClone

(IMCL)

,

Genentech

( DNA),

Eli Lilly

(LLY) - Get Report

and

Celgene

(CELG) - Get Report

, the traders noted.

Najarian said that OSI Pharmaceuticals is another name to watch. He said he's going to open some positions as trades on the conference tomorrow.

Trader Radar

JetBlue

(JBLU) - Get Report

traded on extraordinary volume today.

The traders then discussed the situation confronting Iraqi oil with retired general Barry McCaffrey. McCaffrey observed improved internal security in Iraq. He said that if the country can pass a hydrocarbon sharing law and hold provincial elections, we may see Iraqi oil in the markets. He attributed delays in oil exports to corruption and chaos in the country. He said that five years from now, Iraq may be sufficiently functional to export oil.

Najarian said the trade off that is in the oil services, such as

Baker Hughes

(BHI)

and

Halliburton

(HAL) - Get Report

.

Finerman recommended buying

U.S. Oil Fund

(USO) - Get Report

puts against long positions in oil services.

Adami recommended

Jacobs Engineering

(JEC) - Get Report

and

Fluor

(FLR) - Get Report

.

Macke said he is staying long the USO because it will be a while before Iraq starts meaningful oil production.

Tim Seymour joined the traders to talk about Brazil. He said that Brazilian banks such as

UniBanco

( UBB) and food processors like

Perdigao

( PDA) and

Sadia

(SDA)

have good upside. He said Brazil is outperforming Latin America.

Final Trade

Macke said to sell Yahoo!. Adami picked Celgene. Finerman chose

WellPoint

(WPT)

. Najarian selected Amylin.

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