'Fast Money' Recap: Play China's Interest Rate Cut Carefully - TheStreet

NEW YORK (TheStreet) -- The S&P 500 climbed 0.52% on Friday following positive stimulus comments from the European Central Bank and China's surprise decision to cut interest rates. 

Thanks to China's decision, investors can buy emerging market stocks as well as copper, according to Tim Seymour, managing partner of Triogem Asset Management. 

The Chinese economy is obviously slowing, said Brian Kelly, founder of Brian Kelly Capital. The jump in commodities prices will be short-lived. He is a buyer of the iShares 20+ Treasury Bond ETF (TLT) - Get Report and a seller of oil. 

Investors have been worrying about a slowdown in China for years, said Guy Adami, managing director of stockmonster.com. So far those worries haven't come to fruition. However, Japan's economic issues seem worrisome and for that reason, investors can stay long the TLT exchange-traded fund. 

The OPEC meeting is scheduled to take place Nov. 27. The question is, will OPEC decide to slash oil production? The group will likely want to push up oil prices, said Steve Grasso, director of institutional sales at Stuart Frankel. However, it seems unlikely OPEC will cut production. It will, however, make positive comments to push up those prices, he added.

Production will probably be cut by half a million barrel per day, Seymour said. The cut, while small, will probably be enough to give the oil markets a slight rally. 

It looks likes shares of Schlumberger (SLB) - Get Report are poised to break out, Adami said. He is a buyer of the stock. 

Caterpillar (CAT) - Get Report is a big beneficiary of Chinese economic activity. An analyst at Stifel Nicolaus upgraded the stock to buy and assigned a $22 price target. The company is a lot better than it was a few years ago, Seymour reasoned, but the global economy is not that strong. He is not a buyer. 

Both Caterpillar and Deere (DE) - Get Report are making a series of higher lows, Grasso said, which is bearish price action. He is a not a buyer of either stock.

That wasn't the only analyst note issued on Friday -- Microsoft (MSFT) - Get Report was initiated as a sell at Jefferies with a $40 price target while Amazon (AMZN) - Get Report caught an upgrade to buy at Nomura Securities along with a $410 price target. 

Kelly said he is a buyer of Microsoft on a pullback to $44. Adami added that if shares of Microsoft were actually to decline to $40 it would likely mean that the rest of the market took a big stumble, too. He is not a buyer of Amazon. 

Microsoft is a "neutral" right now, Seymour reasoned. The stock doesn't have many near-term catalysts to push it higher, but it does have an attractive dividend. 

Steve Carley, CEO of RedRobinGourmetBurgers (RRGB) - Get Report , was a guest on the show. The company's remodeled restaurants are helping accelerate customer traffic, as is the company's loyalty program. Lower gas prices should help sales but it's difficult to estimate how much of an impact it will have, he said. 

The stock's valuation is actually attractive for its industry, Seymour said. Margins are improving and the stock trades well. It looks "interesting on the long side." Wait for a pullback to $60, Kelly said. Grasso is cautious, saying the stock needs to find support near its 200-day moving average at $65 after shares rallied 46% in the past month. If that level holds, then investors can buy the stock.

For their final trades, Grasso is buying Magnum Hunter Resources (MHR) and Kelly reiterated his buy call of the iShares 20+ Year Treasury Bond ETF. Adami said to buy Comcast (CMCSA) - Get Report and Seymour is buying put options on the iShares Russell 2000 ETF (IWM) - Get Report .

-- Written by Bret Kenwell

Follow @BretKenwell