'Fast Money' Recap: Head Fake?

NEW YORK ( TheStreet) -- The markets rallied for the second day in a row on the strength of the financials and signs of hope across the Atlantic.

The Dow Jones Industrial Average jumped 274.66, or 2.82%, to 10,018.28, while the S&P 500 added 32.21, or 3.13%, to 1,060.27. The Nasdaq added 65.59, or 3.13%, to 2,159.47.

Tim Seymour said on CNBC's "Fast Money" TV show that today's rally demonstrated to all the naysayers that "things aren't that bad."

Guy Adami said all the talk about "death star" and "Darth Vader" were overdone. He said he still believes the market will head significantly lower but at least investors will have 1,040 as the bogey.

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 the markets saw more signs of confidence from Europe, the bond market and technically. He said investors can now go in and snatch up names like Google ( GOOG) and Monsanto ( MON).

Karen Finerman said she didn't think a whole lot of the rally. She said today's rally was "inevitable" because valuations had been stretched so much to the downside.

Brian Kelly said he wasn't impressed with the rally. "One day doesn't make a trend." He said the fundamentals haven't changed from yesterday when he had a decidedly bearish market outlook. He said he didn't see any reason to consider going long until the S&P reaches 1,100.

Finerman said second-quarter earnings will play a key role in the direction of the market, adding the bar has been set low for the financials.

Seymour said it's a confusing time for investors because they are being thrown conflicting opinions from the media and top-line strategists about the direction of the market. He said investors should be focusing on companies.

Adami said the economy appears headed for a significant slowdown based upon recent retail reports that depict a strapped consumer.

Terranova said the direction of the market is going to be dictated by earnings. For example, he pointed to the strong performance of major tech firms like Akamai ( AKAM) and Apple ( AAPL), saying they have "pricing power."

Doug Kass, founder and president of Seabreeze Partners, said the market has reached a low. He said the proximate cause for it was that the "bulls were worn out and sold out." He reiterated what he said the day before that "we were traveling a path of fear that was disconnected from the fundamentals and other risk metrics and markets."

Melissa Lee, the moderator of the show, said the financials led the charge in today's rally, with optimism from Europe that stress tests will show that the banks there are more well-capitalized than perceived.

Kelly said the results of those tests on 91 banks are due July 23. Seymour said the transparency resulting from the tests is breeding confidence. Kelly said he was positioning himself to short the European banks after the bank rally peters.

Finerman said she was looking ahead to the earnings of large financial names such as Bank of America ( BAC) and JPMorgan Chase ( JPM). She has a hunch that those banks will show improving credit conditions in their earnings.

Jon Najarian expressed concerns about how the rally took off after high frequency trading stepped in on a narrow band of stocks like SPDR S&P 500 ( SPY) and Apple.

Finerman said the 10% jump in Netflix ( NFLX), which has a 20% short interest, terrified her. "I wouldn't want to be long or short in it."

Gary Shilling, president of A. Gary Shilling & Co., said he wasn't impressed with the stress tests because they don't take into consideration how intertwined European and U.S. banks are in their debt problems.

He believes the markets have a significant ways to go downward as deleveraging continues in the gobal financial sector and the U.S. consumer sector.

Taking a look at Thursday's retail sales reports, Robert Samuels, retail analyst for Phoenix Partners Group, said he expects lackluster results, especially in teen sales as many youths don't have money to spend because they don't have jobs.

He said a lot the bad news has been baked into the retail stocks. He particularly liked Finish Line ( FINL), Urban Outfitters ( URBN) and Abercrombie & Fitch ( ANF).

BP ( BP), was up again today, but Terrranova said the better trade was in Anadarko ( APC).

Lee brought in Heather Bellini, an analyst with ISI Group, to comment on tech stocks, which were big gainers today.

Bellini expressed doubts about Microsoft ( MSFT), saying the company is challenged by the iPad and has also missed being in on the growth trends in mobile and tablet computing. She said Microsoft is banking on its core Windows business and the enterprise PC cycle.

She also liked Red Hat ( RHT), which she characterized as a derivative play on virtualization, and VMWare ( VMW) as a good secular growth play.

Lee noted the S&P's top performer was AES ( AES). Seymour said the company has been very active. In addition to announcing a buyback today, the company gets 70% of its revenue from Latin America and is reportedly looking for assets to buy in China.

Herb Greenberg, senior stocks commentator, took a closer look at EMC's ( EMC) purchase of a private data warehousing firm called Greenplum. He said the deal puts EMC in competition with Oracle ( ORCL) and a lot of pressure on Terra Data ( TDC) and Netezza ( NZ) to do something.

In the final trades, Seymour liked Potash ( POT). Adami liked Visa ( V). Finerman liked JPMorgan while Terranova liked Hess ( HES).

-- 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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