'Fast Money' Recap: BP's Woes Mount - TheStreet

'Fast Money' Recap: BP's Woes Mount

The trading panel discussed the implications of a new government report that significantly raised the daily flow of oil leaking into the Gulf.
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NEW YORK (

TheStreet

) -- The markets rebounded Tuesday on the strength of industrial and technology stocks.

The

Dow Jones Industrial Average

surged 213.88, or 2.10%, to 10,404.77, while the

S&P 500

gained 25.60, or 2.35%, to 1,115.23. The

Nasdaq

jumped 61.92, or 2.76%, to 2,305.88.

Guy Adami said on

CNBC

's "Fast Money" TV show, that today's big rally sets up nicely for the bulls and bears. He said it obviously works well for the bulls who believe the rally will continue to go higher.

And he said it works well for the bears who hope the second shoulder of the head and shoulders at around 1,130 or 1,135 of the S&P materializes so that the shorts get squeezed and they can sell into it.

For a breakout of some stocks from a recent "Fast Money" TV show,check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw onTV

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Joe Terranova said the rally is back on again after the market digested all the negative news last week. He said the rally sets up an end-of-the quarter chase by money managers who feel they have to be in the market.

Steve Grasso agreed but wondered whether the chase will last beyond the quarter. He said he's concerned about the lack of volume on the up days and volume on the down days.

Melissa Lee, the moderator of the show, noted a

Reuters

report that said that

Bank of America

(BAC) - Get Report

Merrill Lynch unit has advised its traders not to enter into trades with BP that go beyond June 2011.

Adami said this probably won't be an isolated event and that other trading units will probably follow suit. Grasso said it was further evidence of a decoupling of

BP

(BP) - Get Report

from the rest of the energy space.

Karen Finerman said it was hard to figure out what to make of the report, though she said it "can't be good." She said it would be wrong to compare it to the run against Lehman. She found it "astounding" for BP to be hit with so many "black swan" events.

Was today's rally a quarter-ending meltup? Gary Kaminsky said it wasn't a full-blown meltup. He said a lot of money managers who were "caught with their pants down last week" were looking for reasons to get back into the market.

Lee halted the discussion to tell the panel of a news report that the government had revised its estimate of the extent of the daily BP Gulf spill to 60,000 barrels a day.

The panel took that as a ominous sign. Adami said the report makes it just that more risky to trade in BP. Finerman said BP faces penalties under the federal Clean Water Act for every barrel spilled.

Adami mentioned some energy names that are doing well like

Apache

(APA) - Get Report

and

McDermott

(MDR) - Get Report

. Grasso said he would go with larger-cap integrated names like

Chevron

(CVX) - Get Report

and

Exxon Mobil

(XOM) - Get Report

.

Finerman said she was surprised to that

Andarko

(APC) - Get Report

, which owned 25% of the well in the Gulf, had only $170 million in liability insurance. She thought that was a small amount.

Brian Kelly expressed fears that BP may be liable for $80 billion to $100 billion. "It's time to get out of the stock."

Pavel Mochanov, an energy analyst with Raymond James, said the Reuters report was very troubling. He predicted the stock will be weaker tomorrow.

He said BP's problems are piling up, as it faces possible criminal fines, cleanup costs and civil liabilities. He said the market has an extremely perception of the stock.

Lee shifted the discussion to the future of energy space and brought in Bank of America Chairman Chad Holliday.

Holliday said the country needs to spend more on energy research and development and let the market decide on the winners. He said the government needs to spend $16 billion on energy innovation, adding he liked the prospects of biofuels, solar cells and new concepts around nuclear energy.

Was today's rally a bull market or BS? Daniel Niles, co- CIO of Alpha One Capital Partners, said it was great that the S&P moved above its 200-day moving average but he said the "worst is in front of us."

He said he wasn't pleased with

Best Buy's

(CME) - Get Report

earnings or the news from Europe that the cost of insuring debt for the PIG countries rose 4% to 11%. He said he would short anything in the PC food chain, especially communications.

In the "Call to the Floor" segment, Lee brought in Terrence Duffy, executive chairman of

CME Group

(CME) - Get Report

to discuss the IPO of

CBOE

(CBOE) - Get Report

. He said it was fortunate for the CBOE to begin trading on a strong market day and do so well.

Jon Najarian said both CME and CBOE should do well once the financial reform bill passes. He said growth of derivatives trading is a plus for CME, while CBOE has the technology to clear the contracts. He said it was encouraging to see investors scrambling for CBOE shares even though they were priced on the high end.

In the final trades, Terranova said to get out of Best Buy while Adami liked

Akami

(AKAM) - Get Report

. Finerman liked

JPMorgan Chase

(JPM) - Get Report

and Grasso liked

Tenneco

(TEN) - Get Report

.

-- Written by David Tong in San Francisco

To watch replays of Cramer's video segments, visit the Mad Money page onCNBC

.

"Check out

"'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.

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