NEW YORK ( TheStreet) -- The markets retreated Thursday despite some encouraging economic data.

The Dow Jones Industrial Average fell 7.79, or 0.08%, to 9783.92, while the S&P 500 slipped 3.27, or 0.31%, to 1065.49. The Nasdaq dropped 6.40, or 0.30%, to 2126.75.

The rally stalled even as the federal government reported a decline in initial jobless claims and a rise in housing starts in August to the highest levels in nine months.

CNBC's "Fast Money" TV show started with a look at Palm ( PALM) that was dipping in after-hours.

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

Melissa Lee, the moderator of the show, said the stock was hit with a double-whammy from a disappointing second-quarter outlook and the announcement of a large secondary offering.

Jim Goldman, a CNBC reporter, said the company had a lot of good news in its earnings report. He said the company's earnings exceeded expectations and smartphone shipments were far above analysts' expectations.

Tim Seymour, though, said Palm still has a lot to prove, especially with its distribution system. "That's the reason why the stock isn't being rewarded," he said.

Pete Najarian said Palm's distribution arrangement with Sprint isn't working, and that it needs to hook up with someone else.

Lee shifted a general discussion of today's trading session. She alluded to comments by Doug Kass and others who warned of a "nasty selloff" once the S&P moves 20% above the 200 moving-day average, which it has.

Seymour, though, said any decline will be shallow, and Karen Finerman said she doesn't expect the market dynamics to change that much because of the pressure from investors on the sidelines who are eager to get in.

Joe Terranova came up with the most far-reaching explanation when he said the market is actually in good shape because the S&P is trading above its 400-day moving average. Pete Najarian said he didn't see much downside pressure on the market today.

Lee noted that Richard Bove, an analyst with Rochdale Securities, raised his price target on Citigroup ( C) to $5 after he found out that the reports earlier this week that the Treasury Department might unload its huge stake in the bank were groundless. Seymour said Citigroup made an impressive statement when it raised $2 billion in five-year notes without FDIC backing.

Shifting to gold, which cooled off today, closing at $1012 an ounce, Dennis Gartman said the trade is overpopulated and expressed surprise when Lee told him there are currently eight gold ETFs.

He said he does own gold but not in dollars. Rather he owns it in the sterling and euro. He agreed with Seymour that the gold-miner stocks are in "nosebleed" territory. He said the best way to play gold is to trade is through SPDR Gold Shares ( GLD - Get Report).

Gartman and Terranova commented on the big move in sugar this year. Gartman said the best way to trade sugar is to buy sugar figures or get into a larger sugar manufacturer.

Lee shifted the discussion to a segment that has been looking at Lehman a year after its fall. Richard Bernstein, of Richard Bernstein Capital Management, told the panel that "junkiest" companies will perform best if the recovery really happens. He said stocks that jump 60% to 80% are "perfectly normal" and not really risky.

He said once the focus shifts from the balance sheet to the income statement and cash flow, the attention will be drawn to companies with the greatest operating leverage. He said the junkiest companies have that leverage and therefore "explosive" cash flows.

He declined to offer any names in that category, but he did say consumer cyclical stocks fit that description. He said it's remarkable how strong the "low-quality rally is" and "how long it lasts."

Shifting to oil, which was flat today, Terranova said he liked the refinery stocks, which are starting to unwind after being priced for Armageddon. He said the demand for reformulated gas is pushing up stocks such as Tesoro ( TSO) and Valero ( VLO - Get Report).

Lee brought in Peter Schiff, a noted bear who just threw in his hat today in the senate race in Connecticut. He said he's running for office so that he can educate members of Congress about the impending economic disaster facing the country.

He said the government needs to raise interest rates, encourage Americans to save money and cut runaway government spending. He said government needs to shrink so that markets can run efficiently and do what is necessary to restore order to the economy.

In an interview with Finerman, James Hoffa Jr., president of the Teamsters Union, defended the rights of workers to good and fair conditions. He said productivity can increase without sacrificing good wages and health care. He also said the union is behind the passage of the employee free choice act, which he said would give U.S. workers the same rights enjoyed in other countries.

In the final trades, Seymour told viewers to buy "overbought" Apple ( AAPL), when it falls to $170 to $175. Terranova said the best way to get exposure to reformulated gas and heating oil is through U.S. Heating Oil Fund ( UNH - Get Report) and U.S. Gasoline Fund ( UGA - Get Report). Finerman said to lighten up on Pride ( PDE), which she said has had a "great run." Najarian said he liked Western Refining ( WNR).

-- Written by David Tong in San Francisco

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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

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