'Fast Money' Recap: Mutual Fund Monday

NEW YORK ( TheStreet) -- The weak dollar and a strong existing-home sales report sent the markets off to a roaring start Monday.

The Dow Jones Industrial Average jumped 132.79, or 1.29%, to 10,450.95, while the S&P 500 added 14.86, or 1.36%, to 1,106.24. The Nasdaq rose 29.97, or 1.40%, to 2,176.01.

Pete Najarian said on CNBC's "Fast Money" TV show that today's rally followed a predictable pattern of "Mutual Fund Mondays" that has seen capital move into the markets on the first day of the week.

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

He said this pattern has occurred nine of the past 11 Mondays as mutual funds chase performance toward the end of the year.

He said volatility came down today as people started to price in the Thanksgiving holiday.

Joe Terranova said the markets were encouraged by the comments about a low interest-rate environment for 2010 and potentially 2011 by Chicago Fed President Charles Evans. "That's a free pass for the commodities and industrials," he said.

Guy Adami said something has to happen to get the dollar to spike. He said it could very well be a geo-political factor like a confrontation between Israel and Iraq or Iran that could send investors to the dollar in a flight for safety.

Karen Finerman said investors can stay in the markets by buying put protection.

Rick Santelli, the moderator of the show, said commodities were up, with gold hitting another record. Terranova said the technicals and fundamentals of the gold trade are "phenomenal."

He said Russia is the next central bank that is diversifying into gold. However, he said he still has the feeling that "someone has placed a position on the short side."

He said gold has been resilient and has not given the shorts a chance to cover. He said there is either going to be a orderly cover of the shorts or a "blowoff top" that will force the shorts to rush to cover their their positions.

Najarian reminded viewers not to forget copper which continues to make new highs. Finerman said the oil service names are in "no-man's land" right now and a little too expensive.

Terranova said investors should be a little defensive in the oil trade. He said he wouldn't want to be in the refiner names and called the oil service names "tepid." He also said the ag names have not been performing well and to take some of that trade off the table.

Santelli noted today's existing-home sales report was solid. Finerman said it was a "good thing" and reinforced her belief that bottom in housing has been reached. She also sees an improving commercial real estate sector. Adami, though, said all the talk about falling inventory could be deceiving because it ignores the possibility that homeowners are afraid to put their homes up for sale in a weak market.

On the prop desk, Santelli expressed worries about what he saw last week, when T-bills moved into negative territory. He said the question in the coming months is what will the appetite be for buying government debt. He also wondered what the split will be between domestic and international buyers.

In the spirit of Thanksgiving, Jon Najarian provided three undervalued stocks with strong potential price action in the future. His choices included Becton, Dickinson ( BDK), Unitedhealth Group ( UNG) and Lowe's ( LOW).

Santelli asked Kimberly Greenberger, a Citigroup analyst, for her retail outlook for the holiday season. She said she sees high-end retailers doing well. She said consumers are still looking for value, but the acceleration in sales trends and profitability will be more dramatic in high-end stores than low-end stores.

She especially liked Tiffany ( TIF). She ranked Aeropostale ( ARO) on the low end, saying it faces difficulties continuing a deeper discount mentality.

In the options pit, Najarian noticed unsually high volume activity in stock such as USG Corp. ( USG), Rambus ( RMBS) and Cephalon ( CEPH). He said the most volatile stock was little-known Origin Agritech ( SEED).

Robert Prechter, founder and president of Elliott Wave International, provided a gloomy assessment of the market. He said the S&P is in for a "very large decline in 2010" and advised people to find a safe place for their money. "It's not a time to invest."

He also said he's very bullish on the U.S. dollar. He said 97% of the traders now are bullish in gold and 95% of the traders are bullish in silver, leaving only 3% to 8% bullish in the U.S. short dollar. He said that situation is leading to a set-up for a reversal in the dollar trade.

Santelli brought in Dave Barger, CEO of JetBlue ( JBLU) for his assessment of holiday travel. He said the holiday season looks strong, with good deals around the holiday season.

He said he's finalizing plans for next year, adding the airline is not planning to take on any new planes after adding nine new planes this year. He said the airline is hedging its purchases of oil, adding it's a hard thing to do. He said 61% of its fuel in the first quarter has been hedged.

In a segment called "give thanks," Adami provided his pick for Thanksgiving: Apache ( APA), one of his long-time favorites that is up 31% in 2009.

In the final trades, Terranova said to take some Potash ( POT) off the table. Adami said to short UPS ( UPS). Finerman liked The Children's Place ( PLCE). Najarian liked Cliffs Natural Resources ( CLF)

-- Written by David Tong in San Francisco

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