The markets ended mixed Friday, with their best week since mid-March. The Dow Jones Industrial Average rose 32.12, or 0.37%, to 8,843.94, while the S&P 500 was down 0.36, or 0.04%, to 940.38. The Nasdaq was up 1.58, or 0.08%, to 1,886.61. Joe Terranova said on CNBC's "Fast Money" TV show that this week's rally was fueled by China's stimulus and solid balance sheets from the likes of Goldman Sach ( GS), JPMorgan Chase ( JPM)and Intel ( INTC). Pete Najarian said investors should take some profits after some great runs this week. Jared Levy said the market needs another catalyst after tech and financials, and that catalyst could be energy. Najarian said he believes investors should buy put protection next week because "we could be back to 900 in a blink of an eye." With regards to the financials, Karen Finerman said she would stick with Goldman and Bank of America ( BAC) and avoid Citigroup ( C) because "you don't know what the play is there" because of its troubles. Staying in the financial sector, Terranova said he would short the regional banks because of their exposure to commercial loans and prime jumbo loans. Finerman agreed with the approach of going long the capital markets and short the regionals. CIT Group ( CIT) doubled at one point in today's trading session after a news report said it is in talks with JPMorgan and Goldman for short-term financing. However, Chris Brendler, an analyst with Stifel Nicolaus, downplayed the report, saying the debt financing is probably part of a bankruptcy filing. He said a better approach for CIT would be a debt-equity swap that would put it in a position to qualify for some government financing.
Brendler had a dim long-term outlook for CIT, saying its business model is broken. Melissa Lee, the moderator of the show, shifted the discussion to technology with Microsoft ( MSFT), Apple ( AAPL) and eBay ( EBAY) set to report next week. Najarian said he has his eye on Nvidia ( NVDA). Terranova was bullish on Microsoft, saying the company is making an attempt to be an innovator again and going after their competitors. "They have $26 billion in cash to do it," he said. Lee brought on Patty Edwards, founder of Storehouse Partners, who had a dire outlook on the economy. She said the consumer is totally leveraged and on life support. She was skeptical of this week's earnings, noting many of the companies showed bottom-line growth but little top-line growth. "You can't cost-cut your way out of this," she said. She said she has a very conservative outlook and likes a stock like Philip Morris ( PM), which provides some international exposure. She believes emerging markets will come back sooner that the U.S. economy. Lee asked Dan Niles, co-CIO of Alpha One Partners, to take a position on Apple, which reports earnings next week. The stock is up over 60% this year. Niles said most people are expecting a couple hundred million dollars above the consenus forecast of $8.2 billion in revenue and a 10-cent earnings beat. He said few people put much stock in Apple's guidance. But he said the company's September quarter is important. He said Apple cut Mac prices in early July, drove down the price of its 3G iPhone to $99, and faces higher component costs, with flash memory prices up 40% to 50% in past 90 days.
Niles said Apple's margins will be under pressure in the third quarter because of its aggressive pricing. Terranova said he would rather have Research In Motion ( RIMM) than Apple at this point. Lee moved on to talk about American Express ( AXP), which surged 21% this week going into earnings next week. Finerman said the key here is American Express' transaction portfolio. If it is anything like the valuation of the transaction portfolios of Visa ( V) and Mastercard ( MA) , "there is more upside here," she said. For the stock of the day, Najarian delved into the coal names, which he said are on fire, and picked Peabody ( BTU), for its exposure to the markets in China and Asia. The stock is up 47% for the year. Joe Lavorgna, chief U.S. economist for Deutsche Bank, appeared on the show to elaborate on reports today of an uptick in housing starts and permit. He said things are getting better although banks are still hurting. Jeffrey Pollack, president and commissioner of the World Series of Poker, appeared on the show to talk about the success of this year's event, which drew more than 60,000 entrants. He said the event has handed out more than $1 billion in prize money. He credited the success to poker being global game. He said the 60-day event created a buzz in Las Vegas. Terranova, though, said he would stay away from the Las Vegas casinos, which he said are debt laden, and consider instead the regional operators.
Lee asked Jim Iuorio to talk about Yahoo ( YHOO) which has reached its highest levels since September 2008. Iurorio said he would stick with buying in-the-money calls than the stock itself. In the final trades, Terranova said he would go with the coal names, while Levy said he would purchase the Feb. 23 puts on AIG ( AIG). Finerman was long Anadarko ( APC). Najarian liked Nokia ( NOK) and Suncor ( SU). "Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday.