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'Fast Money' Recap: Yahoo! Stays in Play

The trading panel looks at the dynamics of Carl Icahn's proxy challenge.

The U.S. stock market showed some vigor Wednesday, closing to the upside on a decent inflation number and less-than-disastrous news from the financial sector. The Dow added 0.5%, the S&P 500 climbed 0.4%, and the Nasdaq ticked up 0.1%.

On

CNBC's

"Fast Money" TV show, the traders discussed billionaire investor Carl Icahn's after-hours decision to pursue a proxy battle to extract value from

Yahoo!

(YHOO)

.

Microsoft

(MSFT) - Get Microsoft Corporation Report

recently walked away from an acquisition of the Internet company.

Finerman said that the risk/reward on Yahoo! is not fantastic at this level. She said that the stock has already risen because investors thought Icahn would join the fray. There's more certainty now that Icahn has officially joined the battle, but there's no certainty that Microsoft is still interested in buying, she said.

Macke said he believes Icahn will win the proxy battle. Microsoft will return to Yahoo! at some price, he said.

The traders discussed Icahn's pursuit of a 12-member slate for Yahoo's board, meaning he's seeking a full slate. Finerman said that a full board is much harder to win than a half board, because proxy advisory firms have a harder time condoning elimination of an entire board. She said this means there's higher risk that a deal will not get done.

Najarian said it's important to make sure Microsoft is still interested. He said he believes that because of the stock, Microsoft will still want to do a deal. He took off half of his Yahoo! position today, he said.

Adami said that he still believes the best Yahoo! trade is to own

Google

TheStreet Recommends

(GOOG) - Get Alphabet Inc. Class C Report

.

Macke said he wouldn't own Yahoo! and he prefers Microsoft. Adami said he wouldn't own Yahoo! either, given that Icahn has had trouble extracting value from

Motorola

(MOT)

. Finerman agreed. Najarian said he would hold the remainder of his position.

Rolling Over

Tech stocks rolled over in late trading today. Najarian pointed out that selling occurred across the board, including in oil services, coal and agriculture. Macke agreed, saying the market tried to rally off decent news from

Freddie Mac

undefined

. Nobody believed the rally in the financials, he said, and sometimes that's all you need to get a selloff.

Finerman said she owns

Citigroup

(C) - Get Citigroup Inc. Report

LEAPS, and she's still comfortable with her bullish position. Adami said Citigroup sets up well for a trade. He said the next 5% to 8% move in the stock will be higher.

Najarian urged viewers to look at

Visa

(V) - Get Visa Inc. Class A Report

,

MasterCard

(MA) - Get Mastercard Incorporated Class A Report

and

American Express

(AXP) - Get American Express Company Report

.

Jeff Macke said it's smart to buy the dip in the financials, but not because of Freddie Mac.

Throwing Out the Dishwasher

News broke that

General Electric

(GE) - Get General Electric Company Report

will be selling its appliance business. Adami said he thinks the company is selling low. It doesn't make sense to sell this business at this point in the economic cycle, he said. Macke agreed, suggesting that GE will probably go to Asia to try to sell the segment.

Macy's

(M) - Get Macy's Inc Report

traded higher on decent earnings today. Macke pointed out that the stock saw a nice reaction to in-line numbers.

Deere

(DE) - Get Deere & Company Report

fell 10% after saying raw material costs might hurt it business. Adami said that Deere is setting out for a trade on the long side with a stop out on any close below $80.75.

Najarian said that Deere's problems today don't mean that the ag story is over. He said names like

Potash

(POT)

,

Monsanto

(MON)

and

Agrium

(AGU)

are worth playing. He said he likes

Terra Industries

(TRA)

at these levels.

About the Oil Pullback

Oil prices came back down a little today. Adami said that if the government releases oil from the Strategic Petroleum Reserve, that's bearish for oil prices. He pointed out that after Hurricane Katrina, the government tapped the reserve, and oil went down 8% to 10%. He said a similar move may happen if the SPR opens up again.

Independent oil trader Joe Terranova joined the show to elaborate. He said investors can expect a short-term pullback in oil, but that the commodity will continue to rise in price over the long term. He recommended a paired trade for the short run. Get short the

U.S. Oil Fund

(USO) - Get United States Oil Fund LP Report

and long the

U.S. Natural Gas Fund

(UNG) - Get United States Natural Gas Fund LP Report

, he said.

Retail Results

Retail names have been exhibiting bullish action lately.

Kohl's

(KSS) - Get Kohl's Corporation Report

and

Nordstrom

(JWN) - Get Nordstrom, Inc. Report

report earnings tomorrow.

Macke said that retailers have been lowering expectations. He said that earnings from both Kohl's and Nordstrom should be "better than apocalyptic," meaning the stocks should go higher.

Finerman said that after a nice run in stocks like

Children's Place

(PLCE) - Get Children's Place, Inc. Report

and

J.C. Penney

(JCP) - Get J. C. Penney Company, Inc. Report

, her fund has sold out of those stocks.

Playing Defense

The traders then spoke with Jon Najarian about bullish activity in defense stocks. Najarian said that

Raytheon

(RTN) - Get Raytheon Company Report

,

General Dynamics

(GD) - Get General Dynamics Corporation Report

and

Honeywell

(HON) - Get Honeywell International Inc. Report

are exhibiting bullish options activity.

Adami said he likes Honeywell because it's cheap on a valuation basis. He said he also likes

Lockheed Martin

(LMT) - Get Lockheed Martin Corporation Report

and Raytheon. Najarian pointed out that Raytheon trades with a price-to-earnings ratio of 10 and that traders were buying upside calls in the name above 52-week highs.

Computer Friends

The traders observed that social networking might not convert into profitable businesses. Macke said investors can get short companies that are buying social networking sites. Najarian said he thinks Google will be able to monetize social networking.

Trader Radar

Whole Foods

(WFMI)

traded on unusual volume today.

The traders then discussed the future of entertainment, pointing to themes such as virtualization and connectivity. They said

Apple

(AAPL) - Get Apple Inc. Report

is leading the way in this space.

Macke recommended

Disney

(DIS) - Get Walt Disney Company Report

because it's a content provider. He said he didn't like

Sony

(SNE) - Get Sony Corp. Report

as much.

Adami sadi that

EMC

(EMC)

is still a good play in storage. Finerman said that as people consume entertainment, they will also be eating junk food, so she recommended

PepsiCo

(PEP) - Get PepsiCo, Inc. Report

.

Najarian picked

Cypress Semiconductor

(CY) - Get Cypress Semiconductor Corporation Report

. The company makes programmable chips for devices, he said, and it has a stake in

SunPower

(SPWR) - Get SunPower Corporation Report

. The stock is still cheap, he said. Moving on to energy, he also recommended

Fluor

(FLR) - Get Fluor Corporation Report

and

Siemens

(SI) - Get Silvergate Capital Corp. Class A Report

as wind plays.

The traders then spoke with Tim Seymour about Turkey as an emerging market play. He said that the country gets a C-minus for political stability, a C-plus for its macroeconomy, a B for investability and an A for the market's valuation. He recommended

Turkcell

(TKC) - Get TURKCELL Iletisim Hizmetleri AS Report

, the

Turkish Investment Fund

(TKF)

and the

iShares MSCI Turkey Invest Market Index

(TUR) - Get iShares MSCI Turkey ETF Report

. He said he prefers the iShares fund to the Turkish Investment Fund.

Final Trade

Macke chose

UPS

(UPS) - Get United Parcel Service, Inc. Class B Report

. Adami selected Deere. Najarian picked

E*Trade

(ETFC) - Get E*TRADE Financial Corporation Report

.