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'Fast Money' Recap: Odd Rally

The trading panel had their doubts about today's rally.
Author:

NEW YORK (

TheStreet

) -- The markets surged Thursday as the energy sector finally showed signs of life.

The

Dow Jones Industrial Average

jumped 273.28, or 2.76%, to 10,172.53, while the

S&P 500

added 31.15, or 2.95%, to 1,086.84. The

Nasdaq

soared 59.86, or 2.77%, to 2,218.71.

Melissa Lee, the moderator of

CNBC

's "Fast Money" TV show, said investors said today that "the selloff has gone far enough."

Guy Adami, caught off guard by the rally, said he had expected it on Wednesday. He called the trading session "very odd" and advised selling into the rally.

Joe Terranova said the markets rebounded on China's strong export numbers and Fed Chairman Ben Bernanke's encouraging comments about the economy on Wednesday.

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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Brian Kelly said he's still short the markets. He said high CPI numbers from China could lead to a revaluation of the yuan and more costly exports. Anthony Scaramucci added China remains very concerned about its overheated real estate sector.

Patty Edwards said she remains cautious about the market, noting there are still too many uncertainties domestically and overseas. She said she was hedged and investing in select stocks.

From a technical standpoint, Adami said today's low volume indicates a move to the end to the high side.

Lee shifted the focus on

BP

's

(MDR) - Get Report

wild ride, as it ended up 13.42% for the day.

Barry Ritholtz, director of equity research for Fusion IQ, said the stock had fallen 40% below its enterprise value and was trading below its 200-day moving average. He said it had moved beyond being a value trap to being a "dirt cheap stock" or something that is going out of business.

He said he is advising his clients to take a cautious approach. Instead of bottom fishing, he said it would best to scale in over time and wait for upside confirmation.

Kelly said he was still staying away from the stock. He said he was worried about the extent of BP's liability, which is very uncertain because it's unclear how much oil is coming out of the well.

Adami said investors can still do well in the energy space by avoiding BP and going into a stock like

McDermott

(MDR) - Get Report

, which he said has been unjustly hammered. Edwards offered another pick, a geothermal name --

Ormat Technologies

(ORA) - Get Report

.

Lee noted that Dell had dropped 2% in afterhours trading after news of a possible settlement with the SEC over alleged longstanding fraudulent accounting activities.

Jim Goldman, a

CNBC

TST Recommends

reporter said the possible settlement was tied to

Intel

(INTC) - Get Report

and kickbacks from the chipmaker in an advertising partnership and chip-supply agreement.

Goldman said Dell has been looking for ways to increase its revenue stream and revive its business.

While the market engaged in a strong rally

, Goldman Sachs

(GS) - Get Report

, closed lower. Scaramucci still likes Goldman, saying the stock is cheap for a company that can mint money, enjoys a high return on capital on its equity base and will eventually solve its problems. Terranova expects Goldman will do well when it reports its trading revenues in its next earnings report.

Lee brought in Edward Mills, an analyst with FBR Capital, to get an update on congressional conference discussions on the financial overhaul bill. He expects the bill will be tougher than expected, adding that will mean more trouble for bank stocks.

He said committee is moving towards tougher derivatives regulation as well as a tougher Volcker Rule.

Scaramucci said he believes the overhaul will be as stringent as Wall Street fears.

Lee noted that companies are raising a lot of cash these days, as much as $930 billion. The panelists were split as whether the cash will be deployed into such areas as mergers and acquisitions and buyback or whether it won't be deployed at all.

Lee brought in Peter Boockvar, an equities strategist with Miller Tabak, about going long on the euro. He said now may the time to do it because a weaker euro could help bolster the troubled European countries. He also said the debt crisis is forcing these countries to exercise some financial discipline, something the U.S. has not done.

He said the big caveat on this trading strategy is what position the European Central Bank will take on quantitative easing: whether it will print money or exercise some financial discipline and put a brake to it.

Terranova said he detected a change in the currency markets, with the euro rallying and the U.S. dollar pulling back.

In the final trades, Terranova was long the S&P. Adami liked

McDonald's

(MCD) - Get Report

while Scaramucci liked

Johnson & Johnson

(JNJ) - Get Report

. Kelly liked

Market Vectors: Junior Gold Miners

(GDXJ) - Get Report

and Edwards liked

Campbell

(CPB) - 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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