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'Fast Money' Recap: Downgrade Day

The crew discusses various downgrades that were delivered.

The Dow Jones Industrial Average closed below 14,000 as technology stock and energy stocks led the markets lower. CNBC's "Fast Money" team considered the drop to be profit-taking and reviewed various downgrades by analysts.

Chip stocks traded lower after Morgan Stanley downgraded

Intel

(INTC) - Get Report

,

Advanced Micro Devices

(AMD) - Get Report

and

NVIDIA

(NVDA) - Get Report

to underweight. Pete Najarian viewed the downgraded as very interesting, but he feels that PC demand is real. Guy Adami sees it as a gutsy call by Morgan.

Mattel

(MAT) - Get Report

and

Hasbro

(HAS) - Get Report

traded lower after BMO Capital Markets downgraded the toy sector. In Macke's opinion, the downgrade is about taking gains and he is still long Hasbro and

Disney

(DIS) - Get Report

CSX Corp.

(CSX) - Get Report

traded lower after it was also downgraded by Morgan Stanley citing lack of freight volume growth. Adami maintains that $38 is the bottom. He also points out that Carl Icahn and Warren Buffett are long CSX. You can check out their portfolios on Stockpickr at

Carl Icahn

and

Warren Buffett

Speaking of Icahn, he raised his stake in

Temple-Inland

(TIN)

to 8.9% and

BEA Systems

to 11%. Finerman thinks that BEA Systems is one where Icahn can become an active shareholder. She hazards a guess that Icahn will sue BEAS to force them to have an annual meeting. Adami thinks BEAS is going higher with or without Icahn.

Word on the Street

Wheat traded lower for the second day in a row on bearish planting forecasts. Najarian believes the pullbacks in commodity names like

BHP Billiton

(BHP) - Get Report

and

Freeport-McMoRan

(FCX) - Get Report

are buying opportunities.

Najarian sees continued buying in October call options on

EchoStar

(DISH) - Get Report

as market speculators seem to be positioning for a takeover or break-up. Both Najarian and Macke like the stock.

iShares FTSE/Xinhua China 25 Index ETF

falls 5% after a huge 2-day run. Chinese markets remain on vacation for the rest of the week, but the Hong Kong Index saw its worst intraday reversal in almost nine years. Adami declares the reversal is for real in the Hong Kong markets and he doesn't see the selloff ending for the rest of the week.

Deal Closed For TXU

Dylan Ratigan reported that financing for a

TXU

(TXU)

buyout could be set to go next week. He is hearing that a deal for the Texan electricity provider will close by the end of October and maybe even next Friday. If this deal closes it will be the largest private equity deal ever. Finerman expressed surprise at the pace the deal.

Having said that, she says that

Guitar Center

(GTRC)

is also close to getting a deal done. Her play on this very recent trend of deals getting done is

Lehman Brothers

(LEH)

and

Goldman Sachs

(GS) - Get Report

because they will be very involved in the deal making. Najarian has professed from the beginning that M&A is over and that many of these deals would get done. Macke disagrees with trading on a M&A trend.

TheStreet Recommends

Blackberry Trade

The Blackberry has been a huge hit for

Research In Motion

(RIMM)

and investors have seen the stock go up 126% on the year. On Thursday RIMM will report earnings after the bell.

CNBC

Silicon Valley bureau Chief Jim Goldman joined the crew to discuss Research In Motion.

Goldman mentioned that Global Crown Capital increased the RIMM target price to $180 a share. It's his opinion that RIMM has figured out how to cross the enterprise gap and appeal to the consumer, and RIMM is going gangbusters.

Najarian says the options are pricing in a 15% move one way on the earnings call. When asked about RIMM moving into China, Goldman says it is absolutely huge that RIMM has gotten permission to go there. China will jump start this company like it has never seen before. Najarian likes RIMM and thinks it has more upside. He advises putting on a call spread for November expiration.

Face2Face

Viewers write in with burning questions for the team to answer.

Allen from Texas writes, "When you see charts for

China Finance Online

(JRJC) - Get Report

China BAK Battery

(CBAK)

and even

Baidu.com

(BIDU) - Get Report

, does exuberance or bubble come to mind? Macke says neither bubble nor exuberance come to mind. He tells Allen that these are momentum plays and you should treat them as such.

Phil from Tennessee asks, "Can you give us some insight into what

Garmin's

(GRMN) - Get Report

recent volume is telegraphing? It was 7 times the average volume to the downside when the

Navteq

(NVT) - Get Report

deal was announced Monday."

Finerman answers that for Garmin this is disruptive for two reasons.

First, it makes the valuation of Garmin rich, and second it's a problem for Garmin to have someone buy the software it needs to make its product. Finerman owns Navteq for a play on Garmin taking it over.

Pops & Drops

Pops --

Panera Bread

(PNRA)

traded up 8% on bullish same store sales numbers. Adami thinks Panera will rally into earnings and then it will be time to sell it.

Harley Davidson

(HOG) - Get Report

traded up 6% off a UBS upgrade. Najarian says it's still way off the highs.

Kaiser Aluminum

(KALU) - Get Report

popped 7% off a Bear Stearns upgrade. Finerman agrees that the stock is still undervalued.

Circuit City

(CC) - Get Report

traded up 5%. Macke advises getting out of Circuit City while you can.

KB Home

(KBH) - Get Report

traded up 5%. Adami says take the profits and run.

NYSE Euronext

(NYX)

traded up 2%. Adami says $85 will be big resistance for NYX. He still feels that NYX is cheap on valuation.

Drops --

Wynn

(WYNN) - Get Report

fell 10% and

Las Vegas Sands

(LVS) - Get Report

fell 12% off disappointing growth numbers for Macau. Najarian says the numbers out of Macau weren't as big as people thought they would be, hence the disappointment.

Midway Games

(MWY)

fell 5%. Macke says MWY is married to Sony whose Playstation has tough competition against Nintendo's Wii.

Final Trade

The crew gives their last and best trades before signing off.

  • Macke says sell homebuilders and book the short-term gains.
  • Finerman is going with Icahn and BEA Systems.
  • Najarian likes Apple (AAPL) - Get Report.

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