The stock market found a bid on Thursday off the strength in the technology sector. The Dow finished up 38 points and the Nasdaq closed up 39 points. The team at CNBC's "Fast Money" got some help from Jon Najarian on the upcoming volatility of the market. Also in the show, an interview with the CEO of CSX (CSX) - Get Report, Michael Ward, as well as a discussion on Research In Motion's (RIMM) earnings.
The options market is pricing in one of the most volatile Januarys on record. Jon Najarian joined the "Fast Money" crew to discuss his take on this suggested volatility. Najarian mentioned that the front month volatility is significantly lower than it is in January, February or March. He explained that this is suggesting that the market is about to see a lot of volatility.
The options market is showing more front month volatility in the Chinese markets. He believes China is about to make a big rally. Najarian also sees a similar setup for the banks and financials and he disclosed that he is long
Capital One Financial
. Jeff Macke likes the trade idea in the financials as long as you have an exit plan.
CSX CEO Interview
Is the weakness in the rail stocks predicting a recession is on the horizon? CSX CEO Michael Ward joined the "Fast Money" crew to discuss his take on the rail sector. Ward said he sees modest growth in revenue and volumes for CSX in 2008. He explained that he sees some challenges in the housing market and automotive market, but he doesn't see a recession coming.
Ward says he is looking for 15%-17% EPS growth through 2010 on a compound annual growth rate (CAGR) basis and he plans to drive down operating ratio to the low to mid 70s. Guy Adami thinks CSX is interesting if it trades down to $40, but he would buy
Burlington Northern Santa Fe
(Check out this portfolio of rail stocks on Stockpickr.com
Research In Motion reported blowout earnings and guided above Wall Street estimates for the fourth quarter. Pete Najarian disclosed he bought RIMM at 1 p.m. Thursday and plans to sell it at the open on Friday. He also disclosed that he sold
after the stock made a nice pop off the strong earnings, and he bought
because he likes the action in the software sector.
reported a $262 million loss for the first quarter due to falling chip prices. Najarian says the memory-chip sector has too much competition. Adami and Macke agreed and they recommended avoiding the sector.
reported a 50% gain in profits but the stock fell 9% after it issued a lower forecast. Najarian explained the stock is getting sold because of the disappointing outlook.
has been on a tear since the company came public in August. Now Microsoft is looking to enter the virtual software space and compete with VMware head-on. Adami thinks competition in the space will hurt VMW, but he doesn't see that happening until the second half of 2008. He explained that the knock on VMW is valuation and when it trades down to the low $80s it's a buy for a trade. Adami mentioned that by the end of 2008 valuation will probably take VMW lower.
fell 26% after the bond insurer disclosed it has $8.1 billion in CDO exposure. Finerman feels that MBIA doesn't have much credibility in the market place. Finerman explained this could be an enormous problem for the entire financial sector if one of the bond insurers were to default. She explained that MBIA has lost more credibility and it probably needs more capital to survive. She disclosed that she covered half of her short position in MBIA Thursday.
reported a fourth-quarter loss but the stock finished higher. Moody's also cut Bear Stearns credit rating. Adami questioned why Bear Stearns and
get rewarded when they don't do things right. Macke disagreed, and he thinks Bear and Morgan are doing the right things by exposing their problems.
reported a 6.3% decline in profits due to fuel costs and slowing freight shipments. Adami thinks the numbers weren't bad, but it's a dead stock. He would look to buy FDX around $90 on a valuation basis. Macke doesn't like the bearish comments the CEO of FDX made about the U.S. economy.
Pops & Drops
traded up 4% off of strong sales in China and Europe. Macke loves this stock.
traded up 2% after the company raised its earnings guidance. Najarian suggested they may have some problems.
fell 3% after the retailer delayed a decision to sell its $7 billion credit-card business. Finerman doesn't think this is good news.
traded down 3% despite a Bear Stearns upgrade. Adami agrees with Bear on the $215 price target.
plunged 32% after the drugstore chain posted a wider-than-expected loss and cut its 2008 forecast. Macke mentioned it's been a tough year for RAD.
fell 3%. According to Finerman, ConAgra has some cost pressure from rising commodity prices.
Leggett & Platt
fell 6% after the firm cut its forth-quarter outlook. Adami thinks the mattress business isn't good right now because of the slowdown in housing.
fell 7% after the steel processor announced a drop in second-quarter earnings. Najarian mentioned that WOR could be a takeover target.
Fans of the show have questions of their own that they'd like answered.
A viewer writes, "Pete mentioned that he is going to sell Research In Motion at the open Friday. Is he selling because he thinks the stock has peaked and will sell off the rest of Friday?" Najarian explained that he has a December options spread trade on and the stock has now made the move he was looking for. Macke says this is a name in which investors can declare victory and move on.
Another viewer asks, "Karen, will you apply additional shorts to MBIA when and if it pops again?" Finerman explained that it would matter what made it pop. If it was from a capital infusion, then she wouldn't short it. If it was from a bullish analyst report, she would short it.
The team gives away their best trade ideas for free.
- Macke likes Walt Disney (DIS) - Get Report.
- Finerman favors ValueClick (VCLK) .
- Najarian picked Microsoft (MSFT) - Get Report.
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