'Fast Money' Recap: Apple's Big Reversal

NEW YORK ( TheStreet) --The markets were pulled down Wednesday by a big reversal in Apple ( AAPL) and another delay in Greece's debt deal.

The Dow Jones Industrial Average dropped 97.33, or 0.76%, to 12,788.95. The S&P lost 7.27, or 0.54%, to 1343.23. The Nasdaq fell 16, or 0.55% to 2915.83.

Melissa Lee, the moderator on CNBC's "Fast Money" TV show, said Apple closed at $498, down 11.46, or 2.25% for the day.

Joe Terranova said he had been waiting for a pullback in Apple after its parabolic move higher following its earnings. He said Apple is trading more like a commodity future than a stock. He said investors should be less long in the stock.

Tim Seymour said traders seem to have been taking advantage of the Apple's parabolic move up after its earnings to short the S&P into expiration.

Lee said Apple is so huge that it contributed to one-half of the decline in the Nasdaq 100 and one-fifth of the drop in the S&P.

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

Mike Khouw said the options activity in Apple was unusually strong, with most of the trades short term with an expiration for Friday.

Karen Finerman called today's trading "ridiculous," saying it's hard to believe a stock can lose $30 billion in market cap in two hours with nothing happening.

Lee indicated there were rumors that the Nasdaq 100 might rebalance to lessen the impact of Apple.

Carter Worth, a chartologist with Oppenheimer Asset Management, said Apple's technical behavior today had all the earmarks of a key technical reversal. He said Apple had been riding a mature intermediate move from $360 to $525 before today when it hit sharp new highs interday, closed at an absolute low, and saw volume expand dramatically.

He said he would take profits in the crowded trade, adding he sees the stock moving down to $450. He said investors would be taking on a lot of risk by "staying blindly in the name."

In the same vein, he said Starbucks ( symbol) is also at the end of a mature intermediate move after it jumped from $35 to $50. He said one one has to ask who's going to be the incremental buyer of the stock at this level.

Worth said he would buy Freeport McMoRan ( FCX), which he said is in the midst of a bearish-to-bullish reversal. He said there is a nice entry point for the stock at $42.

In the call of the day, Lee said Deutsche Bank warned of a huge oil supply shock caused by disruptions in the Middle East and Africa. Kelly said he didn't see any new reports to warrant that conclusion. He said there is a fair amount of oil in this country and pointed out the real problem is getting oil to where it's needed.

Seymour agreed, noting Citibank had put out a note saying that the boom in U.S. gas and oil shale would make North America self-sufficent by the end of the decade.

Terranova noted a strain on spare oil capacity, but he said he was long in the energy space and liked stocks such as Occidental Petroleum ( OXY), Suncor ( SU), Canadian Natural Resources ( CNQ) and Hess ( HES).

Lee brought in T. Boone Pickens to talk about the domestic energy boom. He said the U.S. has an "unbelievable opportunity" to take advantage of the fact that it is producing the cheapest oil in the world and natural gas priced at $2.50 per million BTU.

He said Navistar and Clean Energy have teamed up to build natural gas trucks. He also said the Keystone Pipeline Project will be done.

Shifting to the Volatility Playbook, Khouw noted an 11% jump in the VIX today that saw the options heavily weighted toward puts.

In afterhours trading, Lee noted that Cliffs Natural Resources ( CLF) was down 3.9% after a disappointing earnings report. Kelly said the chief problem was a 38% cost increase that impacted margins. He said demand for iron ore is OK.

General Motors ( GM) reports on Thursday with expectations of strong profits.

Michael Ward, manging director of Sterne Agee, still sees problems with GM's European operations, which is affected by weak economic growth on the continent.

He said his top pick is Ford ( F), adding GM needs to undergo further restructuring of its operations in Europe.

In the final trades, Khouw said he liked Ford ( F) over General Motors in an auto-rebound play. Seymour said he expects Apple to decline. Kelly said he was buying puts in the Materials Select Sector SPDR Fund ( XLB). Finerman liked Children's Place ( PLCE). Terranova said he was shorting Google ( GOOG).

-- Written by David Tong in San Francisco.

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

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