'Fast Money' Recap: Rally Jitters

NEW YORK ( TheStreet) -- The markets staged a strong rally Tuesday on some encouraging economic data.

The Dow Jones Industrial Average jumped 321.89, or 2.97%, to 11, 176.54. The S&P 500 rose 37.54, or 3.34%, to 1161.36. The Nasdaq climbed 100.68, or 4.29%, to 2446.06.

Joe Terranova said on CNBC's "Fast Money" TV show, that he was encouraged by the price action of the market and the reversal in the price of gold as well as the financials.

He said he would be in names like EMC ( EMC), Caterpillar ( CAT) and Whole Foods ( WFMI).

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

Tim Seymour was leery about getting into the stock market. He said he couldn't think of any good reason to get in, adding there are too many "head fakes" in today's market.

For example, Seymour wondered why gold is selling off if QE3 is being entertained and questioned why people think the global growth story is back on the table when the German economy appears weak, with business confidence at a three-year low. "It's a very dangerous tape," he said. "I'm not sure what you have to be happy about."

Stephen Weiss agreed, saying the market scared him more than drew him in. A cautious Karen Finerman also said investors shouldn't be buying stocks solely on the presumption that Fed Chairman Ben Bernanke might come out with a bailout plan on Friday.

Terranova defended his position. He said he was impressed with the market's resiliency and its ability to hang on despite bad news. He also said the market remains cheap from a valuation standpoint.

Brian Kelly said he remains in the bear camp, calling today's rally an example of a bear rally.

Melissa Lee, the moderator of the show, shifted the discussion to gold, which fell 3.18% to $1,831 an ounce. Weiss said the trade had just become too crowded. He said gold could very well get to $2,000 - but without him.

Seymour said gold remains a good trade for all the reasons that it was a good trade going into today - namely the sovereign debt problems in Europe and the shaky U.S. economy.

George Gero, of RBC Capital Markets, agreed with the other panelists who see gold as a crowded trade. He said there could be a gamechanger in the gold trade if the market stabilizes and Bernanke comes up with a plan to revive the economy.

Lee asked the panel to discuss critical comments by Henry Blodget about Bank of America ( BAC) on his blog. Among other things, Blodget's blog questioned the bank's book value and said another $100 billion to $200 billion in writeoffs might be possible.

Weiss dismissed Blodget's analysis and questioned the bank's decision to respond to the blog. Finerman said Blodget's irresponsible comments put Bank of America in a difficult situation of deciding whether to respond. She said there won't be more clarity on the bank's situation until it reports its third quarter earnings in mid-October.

Terranova said the failure of management and public relations officials at the bank have lead to a huge short position against the bank. He said investors would be better off getting into a stock like JPMorgan Chase ( JPM) or Wells Fargo ( WFC).

Lee next moved to the selloff in the homebuilders stocks. Stephen East, an analyst with Ticonderoga Securities, said Toll Brothers ( TOLL) has suffered from a lack of volume caused by a deteriorating economy, weak job picture and lower household formation.

Lee noted that Deere ( DE) rallied today, rising 3.79%. Karen Finerman said it was interesting to note that Cascade Investment had said in a SEC filing that it had taken a 5.8% stake in the company and might engage in discussions with the company on business strategy. She said it was unusual because Cascade is known more as a passive investor.

Seymour said he liked Deere as part of the growing global growth story, and Weiss said he would own both Deere and Caterpillar, which he said are trading at huge discounts.

Lee next took up a flurry of rumors around Apple ( AAPL) with regard to the iPhone and iPad. Terranova said Apple has performed well and bailed out many portfolios.

Craig Berger, a senior technical analyst with FBR Capital Markets, said Qualcomm ( QCOM) stands to do very well from Apple's stepped-up production because it is about to take over the iPhone and iPad lineup and see a jump in its run rate to 115 million units a year from the current 10 million units. He also liked Broadcom ( BRCM) and its close ties to Apple.

Berger dismissed the idea that Apple might go after Arm Holdings ( ARMH), saying it's an acquisition that the regulatory agencies won't let happen because Arm produces for everyone.

With oil above $86 today, Terranova said oil is bottoming and setting up nicely for October when it will be driven by China's demand and U.S. demand that he said is more resilient than it is being credited for.

Kelly said he was surprised by the action in oil because he thought the action in Libya would have sent the price down. He said he was long oil.

Seymour was skeptical about the commentary on oil. He said the U.S. accounts for 25% of the market and its economy is weak.

Doug Kass, a RealMoney Silver contributor at RealMoney.com, came on the show and stuck to his bullish call on the financials he made in an earlier show.

He also said people have become much too bearish when there is hard facts to show that the economy is on the mend, as evidenced in a recent initial jobless claims report, retail sale numbers, interest rates anchored at 0% for two years and strong corporate balance sheets.

In the final moves, Kelly liked Mosaic ( MOS). Seymour cautioned about a fad in the rally in solar stocks. Weiss liked the yield of NuStar Energy ( NU) and Energy Transfer Partners ( ETP). Finerman liked Macys ( M) on a pullback. Terranova was bullish about the market, recommending 1122 as a reference point.

--Written by David Tong in San Francisco.

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