'Fast Money' Recap: Rally's Mixed Signals

NEW YORK ( TheStreet) -- The markets started the new year on a strong note on strong U.S. economic data.

The Dow Jones Industrial Average jumped 179.82, or 1.47%, to 12,397.38. The S&P 500 added 19.46, or 1.55%, to 1277.06. The Nasdaq jumped 43.57, or 1.67%, to 2648.72.

Joe Terranova said on CNBC's "Fast Money" TV show that he didn't trust today's rally. He said he would need to understand what the upcoming corporate earnings story will be and whether the ECB will be buying soverign debt. He also said it doesn't look good with oil trading at $103 a barrel.

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 optimistic about today's rally. He liked what he saw globally, with the unemployment rate in Germany the lowest it's been since the reunification, China and India providing the world the growth it needs and the U.S. economy "clicking on all cylinders."

But Seymour said the strength of the dollar could be the "wrecking ball" for risk assets. Still, he was encouraged to see investors putting money to work at the start of the year.

Guy Adami said it was important to see the S&P close above 1265 because it sets the stage for the index to move to 1350. He also noted the strength of McDonald's ( MCD), which hit an all-time high before closing lower for the day.

Karen Finerman was skeptical of the rally because nothing fundamentally, including the situation in Europe, had changed.

Mike Khouw observed that there may be rotation going on as money shifts to sectors such as utilities and health care.

Mary Ann Bartels, of Bank of America-Merrill Lynch, said she didn't see much long-term conviction in the rally. She pointed out that the S&P was testing its 200-day moving average for fourth time and testing its 10-month moving average at 1276.

She said the channel for the 10-year Treasury yields is still in the decline while the dollar is breaking to to upside. She said the S&P could still test the October lows of 1100.

Commenting on today's extremely low bond yields, George Goncalves, head of U.S. Rates Strategy for Nomura Securities, said he was shorting Treasuries. He said the U.S. economy is doing well while Europe is muddling along. He said the Fed could step in with QE3 to reassure the economy is on track.

Commenting on the likelihood of small bank mergers this year, CNBC reporter Mary Thompson said market volatility and regulators as hindrances in the process in 2011. Adami noted an exception in US Bancorp ( USB) which has outperformed in the financial space and is worthy of being a $30 stock.

Weiss said small banks can't make money when their cost of paying for deposits exceeds what they are able to earn in the markets from loans. He said no one is going to get rich from small bank mergers.

Seymour's pick in this space was Suntrust ( STI) for its decent dividend yield, while Terranova went with PNC Financial ( PNC).

Scott Wapner, the moderator of the show, asked options trader Jim Iuorio to comment on the low volatility. Iuorio expects volatility to grind lower as the U.S. economic outlook improves, with the recovery gaining traction and the Fed still being very accommodative.

Wapner noted Apple ( AAPL) was up slightly today. Tavis McCourt, an analyst with Morgan Keegan, said he had cut his price target on Apple to $513 from $530 on reservations about iPad shipments and the increased competition in the tablet space, as evidenced in the strong sales of Amazon.com ( AMZN) Kindle Fire.

As for Research In Motion ( RIMM), McCourt said the key won't be so much today's rumored management shakeup but the launch of Blackberry 10.

Wapner said Altria ( MO) was down on a Barrons article citing a decline in cigarette smoking. Finerman said Philip Morris International ( PMI) was a better pick because it targets a much large population of cigarette smokers and is involved in less litigation. Adami's pick was Lorillard ( LO).

BP ( BP) shares rose today after it asked a federal judge to have Halliburton ( HAL) to pay for the recovery costs resulting from Gulf Oil spill.

Pavel Molchanov, a senior energy analyst with Raymond James, said the settlement odds are good. But he pointed out that BP will probably get far less than what it's asking because Halliburton and Transocean ( RIG) are contractually indemnified under the existing agreement against losses.

He said he has a downgrade on Hess ( HESS) based on a cautious outlook on crude. He sees crude at $100 a barrel for the Brent and $92.50 for the WTI in 2012.

Commenting on Mark Fisher's call earlier in the day on Kinder Morgan ( KMI), Weiss agreed with the pick, while Seymour said he liked Tenaris and Terranova liked Enbridge Energy ( EEP), the toll-road play.

Terranova commented on the keys to successful investing. He said one of the worst mistakes investors can make is to trade first and rationalize the trade later. He said investors should take to heart when they look at Aruba Networks ( ARUN), which tanked today.

He said the company, which provides wireless networks to buildings, is a great name that could be taken over. He said he was going to wait to hear its earnings story and admitted that he was tempted to buy it off the bottom today.

In the final moves, Weiss liked Chesapeake Energy ( CHK). Khouw advised buying puts in Verizon ( VZ). Terranova liked Consol Energy ( CNX). Finerman liked Timken ( TKR), while Seymour favored Gold Fields ( GFI). Adami liked United Health Group ( UNH).

-- Written by David Tong in San Francisco.

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

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

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

Follow TheStreet.com on Twitter and become a fan on Facebook.

If you liked this article you might like

McDonald's Might Be a Good Buy on a Down Market Day, Jim Cramer Says

McDonald's Might Be a Good Buy on a Down Market Day, Jim Cramer Says

Jim Cramer: Fears About McDonald's Are Overblown

Jim Cramer: Fears About McDonald's Are Overblown

Don't Write Off the Tech Titans: Cramer's 'Mad Money' Recap (Wednesday 3/21/18)

Don't Write Off the Tech Titans: Cramer's 'Mad Money' Recap (Wednesday 3/21/18)

McDonald's Stock Should Be in Your Retirement Portfolio

McDonald's Stock Should Be in Your Retirement Portfolio

What Billionaire Investor Warren Buffett Can Teach You About Retirement

What Billionaire Investor Warren Buffett Can Teach You About Retirement