'Fast Money' Recap: Mixed Signals - TheStreet

'Fast Money' Recap: Mixed Signals

The trading panel couldn't agree on the direction of the market after today's disappointing home sales report.
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NEW YORK (

TheStreet

) -- The markets drifted Wednesday after a disappointing new home sales report.

The

Dow Jones Industrial Average

gained 4.92, or 0.05%, to 10,298.44, while the

S&P 500

lost 3.27, or 0.30%, to 1,092.04. The

Nasdaq

fell 7.57, or 0.33%, to 2,254.23.

Guy Adami said on

CNBC

's "Fast Money" TV show said "people don't realize how close we are to breaking down technically."

Tim Seymour was a little more encouraged about the tape, saying the housing data wasn't all bad, noting that there was an improvement in the delinquency rate and a rise in April home prices.

Brian Kelly agreed with Adami, saying the 33% drop in new home sales is "historic." He said that is significant because housing represents 40% of GDP. "Frankly the market looks a little scary right now."

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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Melissa Lee, the moderator of the show, wondered whether the housing industry might follow the path of the shares of companies in the auto industry, which bounced back after dropping, following the expiration of a buyer tax credit.

Karen Finerman noted that there's been a significant pullback in retail stocks, as evidence in the

Retail Holders

(RTH) - Get Report

, setting the stage for a lower bar before the start of the earnings season. She said the move against the retail stocks was overdone, citing today's drop below $36 in

Best Buy

(BBY) - Get Report

Adami, though, warned that consumers may have fired their last bullet. But Finerman was not as pessimistic, saying retail stocks remain attractive at these levels, as credit quality and bank earnings improve.

Lee noted that consumer stocks such as

Nike

(NKE) - Get Report

and

Bed, Bath and Beyond

(BBBY) - Get Report

were rolling over.

Gary Kaminsky said consumer-related stocks were negatively impacted by today's new home sales report. He expects these stocks to fall further.

But Finerman said it would be wrong to base a forecast just on what happened today. Seymour said consumer-related companies may find support in other parts of the globe where there is sales growth.

One measure of the shaky economy is the depths to which the 10-year Treasury note yield has fallen. Peter Boockvar, an equity strategist with Miller Tabak, said it fell today to 3.11%, the lowest since June 2003. He said the yield is a crucial gauge of the bond market's attitude toward the U.S. economy.

David Rosenberg, chief economist for Gluskin Sheff & Associates, said the possibility of a double-dip recession is growing with the withdrawal of the federal stimulus programs and the deteriorating economic situation in Europe.

He put the odds of a double-dip at 50 to 50. He expects the jobless rate will rise in the second half as the economy struggles.

Looking at the headlines that might make news Thursday, Lee said

Apple's

(AAPL) - Get Report

iPhone 4 goes on sale Thursday with one firm predicting as many as 1 million could be sold on the first day.

Adami said

SanDisk

(SNDK)

is a winner here, though he expressed worries about the valuation of the stock.

Seymour notd that Apple now accounts for 20% of Nasdaq and would have an impact on the index if it heads down. Lee said there was heavy call buying in

Research In Motion

(RIMM)

. Kelly said he liked

Sprint

(S) - Get Report

better.

D-Day for the derivatives issue could come on Thursday when Congress takes up the matter in the financial regulatory overhaul bill. Ed mills, of FBR Capital Markets, said the proposed legislation mentions the need to promulgate regulations 399 times and the need to study 47 times.

As a result, he said it may take years before the financial industry can assess what the impact of the bill will be. Meanwhile, he expects there will be a relief rally in the financials from the prospects of the delay.

In the tech sector, Lee noted that

Red Hat

(RHT) - Get Report

continues to go up. Jim Whitehurst, Red Hat's CEO, said he sees strength in the European market. He said bookings are growing faster than revenues and new projects more likely to happen.

He said Red Hat expects to be boosted by a strong second half and the move to cloud computing.

Shifting back to the housing industry, Nishu Sood, an analyst with Deutsche Bank, said the hope is that an improving employment picture will drive organic demand, but he said the problem with this thinking is that the catalyst has already happened.

Sood said the fundamentals don't support the rally in homebuilder stocks. He said his pick in that space is

MDC Holdings

(MDC) - Get Report

, a land fund.

Adami said

Home Depot

(HD) - Get Report

is a buy at around $28.

In the ear to the wall segment, Kelly said the housing bubble in Australia, where home prices continue to climb, could pop. He said the best play would be to short

iShares MSCI Australia

(EWA) - Get Report

.

In the personal health finance segment running this week, Lee profiled

Intuitive Surgical's

(ISRG) - Get Report

da Vinci surgical robotic system. Adami praised the system but wondered whether budget tightening will force hospitals to cut back on the use of them. He said the shorts will lean on this name.

In the final trades, Seymour said to buy

Wimm-Bill-Dann Foods

(WBD)

on a dip. Adami said he would buy

Adobe

(ADBE) - Get Report

on a dip. Finerman liked

Phillip Morris

(PM) - Get Report

, and Kelly liked

Sprint

(S) - 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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