'Fast Money' Recap: Searching for Answers on Google

NEW YORK ( TheStreet) -- The S&P 500 made fresh all-time highs as Federal Reserve Chairman Ben Bernanke reassured investors that the Fed would continue to support the economy.

Thursday's action saw both eBay ( EBAY) and Intel ( INTC) trading lower from poor earnings results. It didn't get any easier for the tech sector as both Google ( GOOG) and Microsoft ( MSFT) missed top- and bottom-line estimates.

Google missed top-line estimates for the seventh quarter in the row, as higher tax rates and expenses plagued its earnings per share. On CNBC's "Fast Money" TV show, Karen Finerman said because of those factors, the miss looks worse than it actually is.

However, she did note that the lower cost-per-clicks reported was pretty troubling. She said she was long the stock and would probably look to add more, although likely not Friday.

Guy Adami said that when Google was making its push higher, $850 was seen as a level of resistance; that has since turned to support. Although he doesn't expect the stock to get that low, it is a good reference point for traders to get out of a long position if it fails to hold.

Brian Kelly noted that we're starting to see a lot of companies missing top-line estimates, which means companies are failing to grow. This is troubling because the market has already started to price in revenue and earnings growth of 4%-6% and that's simply not happening.

Dan Nathan added that Google tends to be volatile around earnings, citing that the company doesn't provide a whole lot of guidance for investors and traders.

The show's host, Melissa Lee, added that Google has moved up 20% since its last earnings report back in April.

On Microsoft, the crew talked to Dan Niles, co-CIO of Alpha One Capital Partners, who noted that it's the fourth top-line miss in the past five earnings reports for the company, with slumping PC sales continuing to plague results. He also said the company missed revenue estimates for all five of its major business segments.

"Shame on you" if investors didn't take any money off the table with the stock up over 30% year to date, Nathan said. He added the Surface tablet has been an absolute disaster and the cloud is "so necessary" for Microsoft to get right.

Guy Adami added that with all the restructuring efforts and moves into different spaces, it wouldn't be a fast turnaround. He added the stock just got ahead of itself and traders should look at the $31.50 level to get in.

Turning to the "Top Trades," Morgan Stanley ( MS) made headlines after it beat both revenue and earnings per share estimates on Thursday. The stock is up 45% for the year to date and made new 52-week highs, as did the Financial Select Sector SPDR ETF ( XLF).

Nathan said the financials are clearly a sector that's working. Morgan Stanley was the top player in equity trading, which is the first time in a long time, and it also announced a $500 million stock buyback program. He added the firm is expected to grow its bottom-line by double digits this year and that he thinks this one will continue to go higher.

UnitedHealth Group ( UNH) also beat on top- and bottom-line estimates. The stock is up 30% since January and the company also raised the lower end of its profit range for the year.

Finerman said that not only was the news good for the stock on Thursday, but it was great for the entire sector. She added that costs were down and revenue were up, something that always bodes well for any company.

DuPont ( DD) has also been making a lot of headlines since Nelson Peltz said during the Delivering Alpha Conference on Wednesday he was amassing a large position in the stock. DuPont made new 52-week highs on Thursday and is up 28% on the year.

Adami said the stock traded on double its average volume Thursday and that the valuation isn't stretched quite yet. Nonetheless, he added, management said some rather troubling things last quarter and that he would wait until next week, when the company reports earnings Tuesday.

He said he would be a buyer on a pullback, but wants to hear about Europe, emerging markets and, of course, the weather.

With PepsiCo ( PEP) making new all-time highs, Lee wanted to know whether traders should hold on for the ride or take the money and run. The stock closed higher Thursday on Peltz's comments regarding a merger with Mondelez ( MDLZ).

Adami joked that PepsiCo and Mondelez should merge just like he should play for the New York Yankees. He added that at 19.5 times earnings, PepsiCo was too rich and the stock has been trading in a parabolic nature for the last several months. Because of these factors, he thinks traders should get out of the name.

United Technologies ( UTX) is up over 23% on the year and continues to make new record highs. Investors are lured in by the strong growth and the solid 3% dividend yield.

But Nathan said the stock price is getting stretched. He added that it was a very solid company with a strong balance sheet and nice yield, but he thinks that it can be bought cheaper. Should stocks continue to improve with the economy, he said, this is a name to own but he would rather be a buyer in the low-$90 range.

Netflix ( NFLX) made new two-year highs after it received 14 Emmy nominations between its programs "House of Cards" and "Arrested Development." The stock is up almost 200% year to date and is the best performer in the S&P 500.

Panelist Mike Khouw said that it would be much easier for him to fold on Netflix if he had been in the name earlier. Unfortunately for him, he was not, but he did say that at over $200 per share the stock looking a little stretched. He thought it would make sense to begin exiting the position.

He added that while you can follow smart investors into the stock, such as Carl Icahn, it's important to remember that their cost basis is much, much lower.

For their final trades, Nathan said to avoid Boeing ( BA), which he thinks is going under $100. Kelly is a seller of Danaher ( DHR). Finerman is a market seller via the purchase of SPDR S&P 500 ETF ( SPY) puts, as is Khouw, who is also buying put spreads on the Consumer Discretionary Sector SPDR ETF ( XLY). Adami is looking for a bounce in the iShares 20+ Year Treasury Bond ETF ( TLT).

-- Written by Bret Kenwell in Petoskey, Mich.

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.