'Fast Money' Recap: Tight Companies

NEW YORK ( TheStreet) -- The markets closed flat Tuesday on an uptick in U.S. auto sales and a rise in commodities.

The Dow Jones Industrial Average rose 2.19, or 0.02%, to 10,405.98, while the S&P 500 added 2.60, or 0.23%, to 1,118.31. The Nasdaq was up 7.22, or 0.32%, to 2,280.79.

Pete Najarian said on CNBC's "Fast Money" TV show that M&A activity is brisk, judging from the options action in the ag, tech and coal spaces.

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

Guy Adami reiterated his belief that the best way to capitalize on this trend is with Greenhill & Co. ( GHL), which closed higher today. "A couple of deals for these guys, and this stock is going to go through the roof."

Brian Kelly, taking the opposite view, argued the rosy view of M&A activity wasn't reflected in today's disappointing market action.

Karen Finerman, though, said M&A activity is starting to percolate, with the deals "ending up good for the acquirers."

Adami said the low volatility index number today indicates the next move in the S&P could be downward toward the 1,070 level.

Kaminsky said M&A activity alone won't move the markets higher and that it would take a number of components to do that. He also said that fears of a discouraging jobless report on Friday could have sent the markets lower today.

Adami said a poor jobless report could be bearish for the dollar but bullish for the market on the assumption that rates won't be going up anytime soon.

Bob Pisani, the moderator of the show, asked Steve Cortes, founder of Veracruz, to comment on the likelihood of higher rates. Cortes said he could tell rates are going higher from the tepid respond in recent Treasury auctions and the difficulty in finding Treasury bears.

Cortes said money fund managers may have no choice but to put money into equities if they are not getting much of a return from Treasuries. He also said the dollar is not going to go higher because the U.S. is going to face the same kind of sovereign debt risk problems plaguing Europe.

Shifting to the commodities, Najarian focused on the coal space where he said met coal is "where everyone wants to be" and touted Walter Industries ( WLT).

David Faber, a CNBC business reporter, told the panel that M&A activity indeed is picking up as CEO confidence is building, with financing available for investment grade companies. He said the activity is driven by companies that want to "stay in their space."

In the "ear to wall" segment, Najarian said there was unusual options activity in Hartford Financial ( HIG), which seem to indicate it may be a takeover target. Adami said the stock, which was up 4.47% today, was still good from a valuation standpoint.

The panel returned to a discussion that they have been having on dividends and the need for cash-rich companies to loosen their purse strings for their shareholders in the form of dividend payouts.

Kaminsky said sitting on cash is not an acceptable alternative. He said companies should be either making deals, buy back stock on raise dividends. He said those companies that do best for their shareholders are those that have a steady, consistent policy of paying dividends.

Finerman said Apple ( AAPL) and Google ( GOOG) should follow that advice.

Adami said Apple is now in a position where the stock "has to show me" it can rise above $216, while he thinks Intel ( INTC) is headed back to $19.50.

Carter Worth, chief technical strategist for Oppenheimer Asset Management, said he thinks Intel is on the verge of breaking out to $25.

Shifting to the retail sector, Cortes noted a growing divergence between the upper and lower end of the sector, with the higher-end retailers like Nordstrom ( JWN) and Coach ( COH) demonstrating an ability to perform well in a high-rate environment.

Patrick Doyle, Ceo of Domino's Pizza ( DPZ) returned to the show today after it reported blowout earnings.

Doyle said the company has benefited from the momentum from last year and the success of its advertising campaign for a new pizza in the first quarter. He said the company has been going after other national competitors and regional chains.

Pisani brought in Richard Bove, an analyst with Rochdale Securities, who said he was cutting his first-quarter earnings estimates for Goldman Sachs ( GS) to $3.99 per share from $4.88 because of a decline in trading revenue.

In the final trades, Kaminsky liked Ecolab ( ECL). Adami liked Qualcomm ( QCOM), while Finerman liked TJX ( symbol). Najarian liked Cliffs Natural Resources ( CLF).

-- Written by David Tong in San Francisco

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