'Fast Money' Recap: Does the Rally Have Legs?

Guy Adami doesn't believe the rally can be sustained.

Author:: David Tong
Publish date:: May 4, 2009 7:42 PM EDT

The

S&P 500

squeezed into positive territory for the first time in 2009 on Monday.

The

Dow Jones Industrial Average

jumped 214.33, or 2.16%, to 8,426.74, while the S&P 500 rose 29.72, or 3.39%, to 907.24. The

Nasdaq

was up 44.36, or 2.58%, to 1,763.56.

Guy Adami said on

CNBC

's "Fast Money" TV show that the action was "great." "We were looking for 900, and we got it," he said.

However he said he didn't think the rally could be sustained. "We can't go up 2% everyday," he said.

Tim Seymour was excited by the prospects for the commodities, which were fueled by the rally in the construction spending, China's PMI and basic materials.

Karen Finerman said it was "curious" that the rally occurred with the VIX quiet at 34.53.

Pete Najarian said the rally was all about some short covering and people on the sidelines wanting to get in. He said the rally looks a lot better this time because investors have put some protection in place, reducing the risk of panic.

Seymour said he expected other global markets to pile on to the rally on Tuesday.

Melissa Lee, the moderator of the show, asked Jeffery Harte, managing director of Sandler O'Neill, to comment on the financials ahead of the stress test results that are scheduled for release on Thursday.

Harte said the real key for these banks is whether they can take advantage of the rally to raise the capital they need. "We could have a lot of upside from here if the banks are received well," he said.

Lee shifted to the commodities which rose today, led by a rise in China's PMI to a nine-month high.

Seymour told viewers could play this space by going for the "biggest and baddest" stocks like

BHP Billiton

(BHP) - Get Report

Rio Tinto

(RTP)

and

Companhia Vale Ads

(VALE) - Get Report

He also likes the steel and coal stocks such

Arch Coal

(ACI) - Get Report

as solid plays for those who sense an economic recovery is at hand.

Finerman said she continues to like the oil service stocks like

Transocean

(RIG) - Get Report

, which continue to outperform underlying oil itself.

Lee also asked Seymour to comment on emerging markets, which were up 7% today and 25% for the year. In addition to base resources and materials, he said the bank stocks rallied today and the "consumers are alive and well."

He said the

iShares MSCI Emerging Markets Index

can go even higher because of record low interest rates and healthy consumer growth.

Najarian said infrastructure spending looks attractive in China, noting the best approach to take is with the

iShares FTSE/Xinhua China 25 Index

(FXI) - Get Report

, which he calls a "barometer for China and the emerging markets."

Lee noted that

Research In Motion

(RIMM)

moved higher today, leading the rest of the tech sector.

Najarian said everyone has been jumping on this stock. "It feels like it's awfully rich," he said. He cautioned investors those investors who have been in tech to lighten up a bit.

Finerman said she bought some

Emulex

(ELX)

after it rejected an offer from

Broadcom

(BRCM)

Both Seymour and Adami did not think Obama's move to close business tax loopholes overseas would affect companies like

Procter & Gamble

(PG) - Get Report

and

IBM

(IBM) - Get Report

which does a lot of business overseas. Adami said it might have a limited impact on banks.

Becky Hathway, a

CNBC

reporter who attended the Berkshire Hathaway annual meeting over the weekend, said Warren Buffett doesn't believe "we are nearing a bottom yet." However, Buffett said that doesn't mean investors should be buying in this stock market, she said.

Rich Greenfield, an analyst with Pali Research, was brought in to comment on

Walt Disney

(DIS) - Get Report

, which reports earnings on Tuesday.

Greenfield said it will be a tough quarter for Disney which has been affected by severe discounting to fill the theme parks, pressure of a writers' strike and poor local TV business.

Greenfield said he's shorting the stock on the belief that Disney's earnings will be down next year. Indeed, he believes the the stock could retrace down to its prior lows.

Lee invited Gregg Fisher, CIO of Gernstein Fisher, to talk about the value of diversification in today's market. Fisher said he would look at gold, commodities, emerging markets, foreign currencies and water as diversification themes for portfolios.

In the "Fast and Furious" segment, Dan Fitzpatrick said he believes

Foundation Coal

(FCL)

could be a break-out coal stock. He acknowledge the stocks in this space are overbought but he believes there is still some upside.

Adami noted that there is chatter that

Apple

(AAPL) - Get Report

is eyeing

Electronic Arts

(ERTS)

as a takeover target.

Finerman read a letter she penned to George Economu, CEO of

Dryships

(DRYS) - Get Report

in which she criticized the company's excessive debt problems and a serious credibility problem, in which she accused the CEO of self-dealing when Dryships made a $160 million deal with Craig Marine, a company Economu controls.

Lee read a response from Dryships, which said the deal was at "arm's-length."

In the Rising Star segment, Adami touted

Geron

(GERN) - Get Report

, a company that develops treatments for cancer and stem-cell based therapeutics. He said the stock, which closed at $5.32 today, could either go to zero or to $10. His sense is that it will go to $10.

In the final trades, Seymour was for

Mobile Telesystems

(MDT) - Get Report

, Adami was for

IBM

(IBM) - Get Report

, Finerman for

Wal-Mart

(WMT) - Get Report

and Najarian for

Fortress

(FIG)