'Fast Money' Recap: S&P Jitters

NEW YORK ( TheStreet) -- The markets finished on the upside Thursday with a late rally.

The Dow Jones Industrial Average rose 44.51, or 0.42%, to 10,611.84, while the S&P 500 moved up 4.63, or 0.40%, to 1,150.24. The Nasdaq was up 9.51, or 0.40%, to 2,368.46.

Pete Najarian said on CNBC's "Fast Money" TV show said a lot of the action that propelled the markets higher were the result of short squeezes as evidenced in AIG ( AIG) and many retail names.

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 on TV

Joe Terranova said it was encouraging to see the S&P move above 1,150 but he said it would be interesting to see which quality names step up to move the market higher.

Steve Grasso agreed, saying names like Burger King ( BKC) are starting to move higher.

Karen Finerman attributed the melt-up to the pickup in M&A activity and the resurgence of the financials.

Terranova said next month's jobs report will be key, while Grasso said the move toward closure on such issues as health care reforms and tougher financial regulation will have an important bearing on the markets.

Brian Kelly said he was nervous about the market. He said protection is the "name of the game" now, with a market that has "no volume," "potholes around the world," and "currencies blowing up today." "I wouldn't buy the hype today. If this market has a pullback, that's the time you want to buy."

Najarian disagreed, saying investors have a great opportunity to using cheap put protection to pick up some good stocks.

Dan Clifton, head of policy research for Strategas, said there is still uncertainty in the markets over the fate of Obama's health care reforms, which have run into problems, and a financial regulatory reform proposal in the Senate that looks as if it is going to get watered down.

Grasso said the market is a buy if the S&P stays above 1,125.

Melissa Lee, the moderator of the show, noted that Visa ( V) shares are surging. Grasso said he was long on Visa and sees it moving higher. Najarian liked Visa's growth story but was taking some off the table, unless the company uses some of its cash to repurchase shares.

Shifting to this week's auction, CNBC reporter Rick Santelli said it was disingenuous not to include Freddie Mac ( FRE) and Fannie Mae ( FNM) in the proposed financial regulatory reforms now being debated in Congress. He said the two should be broken up and put up for auction, privatized or nationalized. He said they should not be allowed to continue to issue debt and guaranteeing mortgages.

Bob Barbera, chief economist for ITG, said the consumer is doing well as evidenced in the strong-than-expected retail earnings this week. He downplayed the bearish talk on the economy, saying the jobs numbers and consumer spending look good.

The biotech space continued to heat up. Najarian noted the huge amount of call activity in Hologic ( HOLX).

Brian Stutland, head of Stutland Equities, said the names he liked in this space were EMC ( EMC), NetApp ( NTAP) and Health Net ( HNT).

Lee brought in Gerard Cassidy, regional bank analyst for RBC Capital Markets, to talk about the deal-making chatter among regional banks. He said the buyers won't be coming in until they are convinced that the credit problems have peaked. He feels they have.

That said, he noted that SunTrust Banks ( STI), Northern Trust ( NTRS) and Huntington Bancshares ( HBAN) have been mentioned in the chatter.

He said he was not impressed with Regions Financial ( RF) because of its exposure to commercial real estate.

Commenting on the reversal in AIG today, Grass said it was a culmination of light volume and a short squeeze. Meanwhile, Najarian noted the huge options activity in Citigroup ( C) today on higher expectations.

Although the Treasury auctions have been going well this week, Santelli warned about the dangers of a steepening curve and the possibilities of a default by a municipality or state. Barbera, on the other hand, said the debt issuances were necessary to help the markets and economy recover.

Lee brought in John Roque, managing director for WJB Capital, for a chartologist view of the markets. Roque said all the technical signs point to the S&P moving above 1,150. He also said he liked big-cap biotech, less big pharma.

In the final trades, Brian Kelly said he was a short seller of Alcoa ( AA). Terranova said he liked Best Buy ( BBY). Grasso liked U.S. Steel ( X) while Finerman liked SPDR S&P Biotech ( XBI). Najarian liked Caterpillar ( CAT).

-- 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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