'Fast Money' Recap: Trading Apple

NEW YORK ( TheStreet) -- The markets rallied Tuesday on reports of an expansion of eurozone rescue plan.

The Dow Jones Industrial Average jumped 108.05, or 1.58%, to 11,577.05. The S&P 500 added 24.52, or 2.04%, to 1225.38. The Nasdaq rose 42.51, or 1.63%, to 2657.43.

Melissa Lee, the moderator of CNBC's "Fast Money" TV show focused on a rare earnings and revenue miss by Apple ( AAPL), the first such stumble since 2004.

Pete Najarian said Apple shares were selling off after sales of iPhones and iPods came in less than expected. He recommended using every sell-off to pick up shares of the stock.

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 found the sales of iPads discouraging but said Apple's guidance was uncharacteristically strong. Karen Finerman said the fast money would probably look get out of the stock but she said Apple's story is still intact and would be looking to buy some shares.

Guy Adami said Wednesday is setting up to be the most interesting day as investors deal with the news on Apple as well as further reports from Europe.

CNBC reporter Jon Fortt said he wasn't sure iPad sales could be interpreted as disappointing. He said it could have been a situation where the company could not keep up with demand.

Colin Gillis, an analyst for BGC Partners who had downgraded Apple to a hold, said the expectations for Apple had gotten too frothy and saw weakness in the iPhone sales. He said there has to be some concern going forward, especially with the high bar set by the guidance.

He also said Apple also faces competition from Google ( GOOG) in the smartphone space and Amazon ( AMZN) in the tablet space.

Gillis acknowledged Apple's huge cash reserves. He said it made sense to return some of it to shareholders but he said that's not what is Apple's top priority now. He said Apple's revenue growth is slowing.

Lee broke in with some breaking news on a Moody's downgrade of Spain's credit rating to A1, citing vulnerability to market stress, event risks and lower economic growth.

Lawrence McDonald, senior director for Newedge, said it's important for investors not to get excited about getting excited about reports about the expansion of eurozone rescue fund, which he said is quite leveraged.

He said there is a chance to do something in the short term but he said the financing needs of Italy and Spain total $1.4 trillion. He said the two countries will need active access to public capital, and he warned of disagreements over the size of the private sector haircuts.

Lee noted a report that China's GDP grew by 9.1% in the third quarter. She brought in Louis Hsieh, CFO for New Oriental Education ( EDU), which was down 12% today. Hsieh said the company's decline in revenue in Beijing and Shanghai is being offset by growth in other cities. He said the company, which caters to the upper middle class and wealth, is doing well, with 2.2 million students in the past 12 months, revenue growth of 41% and profit growth of 45%. ,

In other tech news, Lee noted that Intel ( INTC) turned in a good quarter. Adami said $24 has proved to be a resistance level for the stock. Najarian said Intel has has been a steady performer and should hit $27. Options trader Mike Khouw said the skepticism in the stock wasn't justified and expected the stock to move higher.

Shifting to Morgan Stanley's ( MS) Wednesday, Michael Wong, equity analyst for Morningstar, said the stock was undervalued and he would recommend it to his clients.

He said Morgan Stanley should do well because its revenues are more tied to equity sales and trading revenue and less to fixed income and principal investments, which hurt Goldman Sachs ( GS).

He said Morgan Stanley has three drivers: expense savings, a tailwind from an improving economy and relatively good trading revenue growth the next couple of years.

Lee brought in Mitch Pinheiro, managing director of Janney Capital Markets, for a different perspective of Green Mountain Coffee Roasters ( GMCR). David Einhorn was highly critical of the company.

But Pinheiro say the company still enjoys significant distribution of its K-up and has significantly scaled leverage from a cost perspective. He said the accounting issues raised by Einhorn aren't significant.

But Whitney Tilson, co-founder of T2 Partners, said he heard Einhorn's presentation and came away feeling the accounting issues were serious. Tilson also said he liked JC Penney ( JCP) because of its top two executives. He also favored Dell ( DELL) because it's so cheap and the company is delivering high returns of capital.

In the Web Extra final trades, Khouw was shorting Green Mountain Coffee Roasters. Terranova was long Goldman Sachs. Adami liked Yahoo! ( YHOO). Finerman also liked Yahoo! and was selling November upside calls. Terranova sees Charles Schwab ( SCHW) .

-- Written by David Tong in San Francisco.

>To contact the writer of this article, click here: David Tong.

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