'Fast Money' Recap: Ugly Reversal for Stocks

NEW YORK ( TheStreet) -- Stocks rallied early Monday on news of the death of Osama Bin Laden but there was little follow-through as the major U.S. equity indexes finished in the red, right around their lows for the day.

The Dow Jones Industrial Average settled 3 points, or 0.02% lower, at 12,807. The S&P 500 fell 2 points, or 0.2%, to 1361, while weakness across the tech sector weighed on the Nasdaq Composite, which fell 9 points, or 0.3%, to 2864.

For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

Melissa Lee, the moderator of CNBC's "Fast Money" show, began Monday's show asking the panel to try to quantify the significance of Bin Laden's demise for Wall Street.

Joe Terranova said he believed the news had both social and market consequences, and that the market consequences weren't sustainable. Noting stocks have been trading mostly on momentum of late, he called today's reversal "ugly" and possibly an indication that the market is running out of steam.

Tim Seymour pointed out that the economic data from abroad was favorable but the market didn't rally, while Guy Adami said so far every reversal has been a buying opportunity.

"We'll see about this one," he added, noting a number of stocks, including Cerner ( CERN), Eastman Chemical ( EMN), and IBM ( IBM) were sitting at or near 52-week highs.

Karen Finerman characterized the Bin Laden news as noise as far as the market is concerned, although the potential for retaliation is a slight negative. She was optimistic about the deal activity that took place on Monday, referencing Arch Coal's ( ACI) deal to acquire International Coal Group ( ICO) for $3.4 billion; Teva Pharmaceutical's ( TEVA) agreement to buy Cephalon ( CEPH) for $6.2 billion; and Community Health Systems' ( CYH) decision to boost its bid for Tenet Healthcare ( THC).

Oil prices gained Monday on the lower dollar, rather than concerns about Mideast turmoil, according to Joe Terranova, who said he sold some of his long position in Apache ( APA) and that it may be time to take some of Occidental Petroleum ( OXY) off the table as well.

Tim Seymour chimed in here, saying the weakness in the integrated oil names was notable today and suggesting ConocoPhilips ( COP) could be bought on the dip. Joe Terranova added that Tesoro ( TSO) and Valero ( VLO) were worth a look here as well.

Monday's action in silver was the next topic of conversation as the metal dove following news that Nymex is lifting margin requirements to trade silver futures. Joe Terranova felt the change squeezes out weaker hands but that the fundamental reason for buying silver remained intact.

Guy Adami said he wasn't sure silver was really even trading on fundamentals at this point, while Tim Seymour said he believes $42.14 is the real test for silver's rally. Silver prices for July shed $2.51 to settle at $46.08 an ounce, after plummeting 13% earlier in the session and bouncing off the $42.20

Anthony Scaramucci of SkyBridge Capital pointed out that negative real interest rates make it much easier for hedge funds to carry these commodities on their balance sheets.

Melissa Lee next greeted Alex Hamilton of EarlyBird Capital, who said President Obama got major political leverage today from the Bin Laden news. He sees spending on drones and cyber defense technologies getting a boost because the event demonstrates a proof of concept for their usage.

Hamilton was then quizzed about SAIC Inc. ( SAI), which he said he rates as a hold, and he mentioned both CIBER ( CBR) and ManTech International ( MANT) positively.

The panel then weighed in the day's deals. Joe Terranova said Arch Coal "had to do something to compete" while Karen Finerman was bullish on the Teva acquisition, saying she still believes in consolidation for the biotech space, although she prefers to trade ETFs, such as the SPDR S&P Biotech ( XBI), rather than individual names.

Tim Seymour also said he likes the Teva deal because it's accretive right away. He acknowledged the bid may have been too aggressive but said the acquisition helps right away and that the company may not be done dealing.

The panel then checked in with Jon Najarian of OptionMONSTER.com at the Milken Institute Global Conference taking place this week in Los Angeles. Najarian said debt is the big deal with the institutional investors at the conference, mentioning names like T. Boone Pickens and Wilbur Ross, among others.

Other topics at the conference included the Bin Laden news, infrastructure and healthcare, Najarian said. Asked about the weak dollar by Tim Seymour, Najarian said the soft greenback was tied into the debt concerns.

Najarian also chimed in on silver, saying he had exited half of his position in the ProShares UltraShort Silver ( ZSL) ETF on Monday as it bounced 16%. He plans to sell out of his position completely if it gets into the mid-16s.

David Einhorn of Greenlight Capital taking stakes in Yahoo ( YHOO) and Best Buy ( BBY) was also discussed by the panel. Karen Finerman called Einhorn's moves "interesting" but expressed hesitation about Best Buy because of the impact Amazon ( AMZN) might be having on the big box retailer.

Joe Terranova echoed the concern about Best Buy, saying the company has too much real estate.

Next up was Mark Mahaney, an analyst at Citigroup, who discussed the firm's upgrade of Netflix ( NFLX) on Monday to buy with a 12-month price target of $300.

Mahaney said the upgrade was the result of the firm stepping back and taking a fresh look at the company, which it believes can produce $7-8 in earnings per share next year. Wall Street's current consensus estimate is for a profit of $6.49 a share in fiscal 2012.

He believes, at current levels, the stock is trading at a discount to the company's U.S. business with essentially a call option on the international operations. Mahaney said the bear thesis that Netflix will be felled by content spending is flawed because this is nothing new. He pointed out that the company has been doing this from the beginning, buying physical DVDs to ship, and said real savings will be generated by the shift to streaming because it's much cheaper the company to deliver that content.

Mahaney added that he believes that if Netflix starts to win subscribers in Brazil and the United Kingdom, management should accelerate its efforts abroad, saying international losses by themselves aren't a negative.

Colin Angle, the CEO of iRobot ( IRBT), was up next. Melissa Lee asked Angle if he's seeing evidence of cutbacks in defense budgets.

Angle replied that iRobot is seeing "great sustainment" of orders with people who are actually out in the field fueling demand for products like the PackBot tactical mobile robot. It was also noted that the company's products have been used to help efforts to stabilize the nuclear situation in Japan following the recent earthquake and tsunami.

Karen Finerman then asked Angle about home demand for iRobot, which also makes the Roomba vacuuming robot. Angle said recovery in the economy is not helping demand as much as the growing realization that the robots actually work.

David Reidel of Reidel Research was up next. He was asked about the Bin Laden news, which he said drives the United States closer to India since there are obvious questions now about how much Pakistan must have known with Bin Laden found living in a large compound near the country's capital.

Reidel said President Obama needs to work on America's alliance with India and recommended Tata Motors ( TTM) as a great play on the underlying strength of India.

Michael Khouw, the director of equities derivatives trading at Cantor Fitzgerald, appeared in the "Options Action" segment next with a trade on Alcoa ( AA), which was upgraded at Goldman Sachs on Monday with a price target of $22.

Khouw said he was looking to execute the July 16, 18, 20 call spread risk reversal, selling July 16 puts at 40 cents, buying July 18 calls at 60 cents, and then selling July 20 calls at 15 cents. He explained he gets "close anticipation to the upside" if the stock rallies up to $20, while he doesn't get long in the stock unless it pulls back to the downside strike price of $16, roughly 7.5% from current levels.

Wrapping up the show with the "Pops and Drops" segment, Guy Adami said he believes IBM's valuation is fine at current levels, noting that the stock continues to shrug off bad news and move higher.

Karen Finerman noted that Cephalon got a nice deal but said that "there's nothing left to see here."

Joe Terranova weighed in on Whole Foods Markets ( WFMI), saying he had no position ahead of the company's results on Wednesday as he believes rising gas prices will impact consumer spending.

Anthony Scaramucci was bullish on International Paper ( IP), saying the company is still a buy and that it has great ability to raise prices.

For their final trades, Scaramucci said he loves Teva, while Guy Adami picked Honeywell ( HON) and Joe Terranova mentioned Starbucks ( SBUX).

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

>To submit a news tip, send an email to: tips@thestreet.com

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from Jim Cramer

Okta, Celgene, Altria: 'Mad Money' Lightning Round

Okta, Celgene, Altria: 'Mad Money' Lightning Round

Tread Carefully: Cramer's 'Mad Money' Recap (Friday 6/15/18)

Tread Carefully: Cramer's 'Mad Money' Recap (Friday 6/15/18)

Cramer Answers: Does Owning the FAANG Stocks Make You Diversified?

Cramer Answers: Does Owning the FAANG Stocks Make You Diversified?

Don't Rob Peter to Pay Paul When It Comes to Tech Stocks, Cramer Explains

Don't Rob Peter to Pay Paul When It Comes to Tech Stocks, Cramer Explains

This Newly Public Trucking Company Expects Rising Freight Costs to Continue

This Newly Public Trucking Company Expects Rising Freight Costs to Continue