'Fast Money' Recap: Market Stalls

NEW YORK ( TheStreet) - The markets eked out gains Monday as they digested some more earnings and encouraging news on new home sales.

The Dow Jones Industrial Average added 15.27, or 0.17%, to 9108.51, while the S&P 500 was up 2.92, or 0.30%, to 982.18. The Nasdaq rose 1.93, or 0.10%, to 1967.89.

Michelle Caruso- Cabrera, the moderator for CNBC's "Fast Money" TV show, said the markets reversed themselves 10 minutes before the end of the trading session.

Joe Terranova said the markets had an ecouraging start with some decent home sales numbers only to falter from a low volume day that left traders scrambling for cover toward the end of the session.

For a breakout of some stocks recently mentioned in the "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw on TV

Pete Najarian said the session's low volatility meant investors were seeking put protection. He said that was a bullish sign because the puts remove the element of panic selling.

Najarian said that although he was encouraged by the 11% jump in home sales, he wouldn't be going into the homebuilding stocks because that would be like going into a "roach motel."

Terranova disagreed, saying the home sales increase indicates a stabilization in residential construction. Najarian replied, saying it's "way too early to go there."

Karen Finerman said Centex ( CTX) is a homebuilder with a strong balance sheet and will be in a good position to take advantage of the situation when housing bottoms.

Caruso-Cabrera shifted the discussion to Amgen ( AMGN), which was higher in after-hours trading after it reported higher profits on lower costs and restructuring and raised guidance.

Mike Huckman, a CNBC reporter, said the big news was the announcement of a partnership between Amgen and GlaxoSmithKline ( GSK) to market a drug to treat postmenopausal osteoporosis. He said the drug, which is awaiting FDA approval, could potentially reap $1 billion in revenue.

Shifting to the trade on the insurers, Carus-Cabrera said Aetna ( AET) was down after it slashed its full-year earnings forecast, citing higher medical costs.

Finerman said Aetna is in a tough position politically. "If you are a HMO company, you shouldn't be talking about how great your earnings could be. This is a political environment where they are coming after you," she said.

" I would stay away from these HMO stocks because of this administration," she added.

Shifting to the commodities, which saw Alcoa ( AA) and crude moving higher, Terranova said energy is about to supplant technology as the leader in the second half. He sees the second-half theme being one of a weak dollar and strong commodities.

Seymour says the rotation to commodities is broader than energy, saying it will include sugar, ethanol, steel and coal. Najarian agreed, saying stocks like Freeport McMoRan ( FCX) and Fluor ( FLR) look cheap with plenty of upside left.

Caruso-Cabrera brought in Greg Troccoli, market research director for Opalesque, for a chartist view of the markets. He sees the market settling in August and testing 1,000, where there may be a "final blow-off" if the market is overextended.

The panel expressed their divided opinions on Jeff Hall, head of Citigroup's energy trading unit, Philbro, who is the subject of a controversial compensation package that will give him $100 million.

Terranova said Hall deserved the package, adding he's a sharp trader who knows his stuff and the kind of professional you would want in your company. The compensation package "highlights where the TARP program fails," he said.

"He's a good trader. When he knows when he's right, he puts the pedal to the floor. What's wrong with that?"

Other panelists, though, wondered how much risk Hall was allowed to take by Citigroup. Finerman said that information isn't available.

Mark Mahaney, a Citigroup U.S. Internet analyst, appeared on the show to talk about Amazon.com ( AMZN) which has dipped 10% since its earnings report last week.

Mahaney said he would be a buyer here and a "big" buy if it falls below $80. The stock closed down 2.6% for the day, to $84.24.

The analyst said the Internet retailer's business hasn't slowed in the past three quarters. He said its overseas business, which accounts for 50% of its revenue, is doing "extremely well." He said the weakness has been the U.S. side of the business, including its video game and console sales. "It will cycle through that," he said.

Najarian said he has seen "unbelievable" call activity in Western Digital ( WDC). He expects the company will say in its earnings on Tuesday how good its margins are and provide a good forecast.

Is it possible for a mutual fund to mimic the tactics of a hedge fund? Dr. Andrew Lo, a MIT finance professor and chairman of Alphasimplex Group, said it can. He said his fund basically tries to determine the broad-base exposures in the hedge fund industry, measure them and implement them using standard exchanged traded futures and currency forwards.

He said the idea behind his fund is to give investors transparent exposure and liquidity at a lower cost.

Daniel Clifton, of Strategas Research Partners, said healthcare reform is slowly dying to the point where policymakers have to compromise. "They have to deal now and live to fight another day," he said.

Specifically, Clifton said it's necessary to pull the public plan out and scale back the size of the overhaul because it's not possible for the administration to get the tax increases it is looking for. He said healthcare stocks should fare in the short term.

In the final trades, Seymour liked Potash ( POT) while Terranova was long McDonald's ( MCD) . Finerman said to sell Transocean ( RIG). Najarian was long UnitedHealth ( UNH).

Reported by David Tong in San Francisco.

"Check out "'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.

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