Fast Money Recap: Why All the Smiles?

Doug Kass joined the crew with his bearish take on things.
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The market continued its somewhat surprising run Tuesday, and the crew on CNBC's "Fast Money" was trying to make sense of it all -- and to help them, they had one of the bigger bears out there, Doug Kass, for the other side of Wall Street's exuburence.

Noting the highlights of Tuesday's action, Pete Najarian says the energy stocks were on fire, especially the service sector. He also likes how the investment banks are acting, even though they're down on the year. Jeff Macke says it was hard to find weakness on Tuesday, but don't get giddy about it.

Guy Adami says he likes the move in

Goldman Sachs

(GS) - Get Report

and he likes the brokers going into earnings. Karen Finerman believes that a lot of the problems that caused the selloff are still present in the market, so she is selling into rallies.

Kass continued that bearish assessment. On

RealMoney Silver Tuesday, he wrote that despite Wall Street's hope that the Fed will act to strengthen our nation's economy, the economic reality will bite.

Kass told the panel that he expects to see continued weakness in housing until 2009 or 2010. He also says he did a Web search for GDP national income accounts and discovered that domestic non-financial profits were down 1.4% in the second quarter and year-over-year net cash flows were down 2%.

Kass believes that

Countrywide Financial

(CFC)

could go broke because of bad loans the company has made. He also believes that tech is a great short because financial services account for 22% of IT spending. His favorite short idea is

Warner Music

(WMG) - Get Report

.

Tech Flexing Muscle

Tech stocks gave the market some strength Tuesday after an industry group reported strong July global chip sales. Macke likes

Intel

(INTC) - Get Report

,

Cisco

(CSCO) - Get Report

and

Microsoft

(MSFT) - Get Report

because tech stocks don't have exposure to subprime. Najarian says the tech stocks have global growth as well. (RealMoney Take: Mark Manning recently said, "With these things in mind, and the tech angle I mentioned earlier, Cisco Systems is a company that caught my eye." To read more on what Manning said,

click here.

)

Najarian likes

IBM

(IBM) - Get Report

,

Dell

(DELL) - Get Report

and

Hewlett Packard

(HPQ) - Get Report

. (RealMoney Take: Mark Manning said recently, "IBM is very close to its $118.82 resistance level from late July. The recent move up is on lower volume than I would like to see from a stock approaching resistance. However, if it can consolidate for a few days, it may be able to build up enough momentum to break through those highs." To read more on what Manning said,

click here.

)

Adami notes that when the market was getting smoked,

Nvidia

(NVDA) - Get Report

was up both days and that was a good tell for tech.

Yahoo!

(YHOO)

traded up on Tuesday after Bear Stearns named it the top pick for the next 12 months. Is Yahoo! a takeover target? Macke says no. Najarian says it's time to own Yahoo! and the options are indicating that you can own the stock into January. (RealMoney Take: Jim Cramer said recently, "Google is selling at only 1 time its growth rate. It is innovating constantly and we all know is taking share from Yahoo!." To read more on what Cramer said,

click here.

)

Apple

(AAPL) - Get Report

traded higher on Tuesday after a Piper Jaffray analyst predicted strong iPhone sales. Najarian says that the new ipod release could be big for Apple and he believes the company will announce a 2-for-1 split soon. (RealMoney Take: Richard Suttmeier said recently, "Apple: Last week's low was $126.63, giving traders the chance to buy again at my quarterly pivot at $128.59 or to sell at last week's risky level at $138.99. The quarterly pivot remains at $128.59, and there's a new monthly risky level at $140.72." To read more on what Suttmeier said,

click here.

)

Is Dealmaking Dead?

Mergers & Acquisition activity in August took a 64% dive vs. July and so far this year 20% of acquirers have called off deals. Some traders now believe that deals for

First Data

(FDC) - Get Report

and

TXU

(TXU)

might fall through. (RealMoney Take: Jim Cramer recently said, "Right now I know that many people seem genuinely nervous that the First Data deal, the first one out of the shoot, won't get done. That's nonsense, it will get done." To read more on what Cramer said,

click here.

)

Will dealmaking see a rebound in September? Najarian says the TXU and First Data deals will get done. Macke is afraid of the

Tribune

(TRB)

deal and he would avoid takeover targets

Dillard's

(DDS) - Get Report

and

Macy's

(M) - Get Report

. Adami says

Hilton

(HLT) - Get Report

is a buy. Finerman says

Alcan

(AL) - Get Report

will get done because it has a corporate buyer.

Oil's Well?

Oil cracked $75 on Tuesday for the first time in a month. Najarian likes

Pride International

(PDE)

, which has seen heavy options activity recently. He also likes

Plains Exploration

(PXP)

and

Suncor Energy

(SU) - Get Report

.

Back To School Trade

With the back to school season upon us, the retailers are getting set to report. Thursday we will hear from

Target

(TGT) - Get Report

and

Wal-Mart

(WMT) - Get Report

.

What is the trade? Macke says he loves Target,

Dicks

(DKS) - Get Report

and

Zumiez

(ZUMZ) - Get Report

for the long term.

Finerman agreed with Macke and she added she likes

Office Depot

(ODP) - Get Report

as well. Adami likes

American Express

(AXP) - Get Report

because insiders have been buying. Najarian favors

Under Armour

(UA) - Get Report

for a play on the football season.

Macke would look at

The Gap

(GPS) - Get Report

to bottom feed, and avoid Wal-Mart.

Trading. Technically

Traders who use technical analysis to trade are closely watching the 1490 level on the S&P 500; the S&P 500 has failed twice to break through that level. On Tuesday it closed 1 point below that level. Will this third time see the market break through and move higher?

Adami says if you're bullish, get long, and if you're bearish get short with a close stop either way. Macke says these levels set up a trade and if the market trades above 1490 that will be a bullish signal. Najarian likes what he sees in the energy sector, but he doesn't believe the financials are an all clear here.

Open the Mailbag

Jason from Arizona asked, "Is there anyway a broke college student like me can make some money off Wal-Mart?" Finerman says hold the stock for the long term. Macke says buy Target over Wal-Mart.

Kevin asked, "Can you ask Najarian if Ben Bernanke and President Bush's speech on Friday alter his sentiments regarding going short on the market in the financial sector? Would he hold his

Ultrashort Financials ProShares

(SKF) - Get Report

or

Financial Select Sector SPDR

(XLF) - Get Report

puts?" Najarian says he thinks a shoe will drop and it will be on Lehman. Adami says he likes Goldman Sachs and he thinks they will blow away earnings.

Pops & Drops

Click here to see today's roundup of "Pops & Drops" and the crew's final take on stocks for the coming day.

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