'Fast Money' Recap: Which Way Will the Market Go?

NEW YORK (TheStreet) -- Traders were nervous on Monday, with all three indices closing in the red ahead of some big earnings announcements and economic releases set for this week.

Over the last several trading sessions, markets have seemed complacent as to whether they should continue higher or pullback and go lower. On CNBC's "Fast Money" TV show, Pete Najarian said the financials are still leading the way; until the sector leaders start to break down, he will remain bullish for the second half of 2013.

Dan Nathan agreed on financials, saying it's the only sector to have true earnings growth while the other sectors have been stale. He added that with the Federal Open Market Committee meeting Wednesday and talks of tapering calling for September, he thinks the market will begin to break down.

Guy Adami was keen to the bear case, but said he was remaining bullish. He added that he doesn't think we're going to see the big selloff that everyone has been calling for and is looking for 1,725 in the S&P 500.

As for earnings, Herbalife ( HLF) beat on top- and bottom-line estimates on Monday after the close. The company also raised its full-year guidance.

Nathan said that with over 30 million shares sold short and 70 million shared owned long by ten shareholders, this stock was not trading on fundamentals. He added that traders were rolling the August 60 calls up to the August 80 calls, potentially signalling much more upside.

On the show's "Top Trades" segment, Adami said to stay away from Omnicom ( OMC) after the announced 50-50 merger with Publicis ( PUBGY), but did not recommend shorting it.

Najarian said that Perrigo ( PRGO) has become interesting now that it bought its way into the biotech space, although he thinks the company overpaid on its $8.6 billion acquisition of Elan ( ELN).

Nathan said that CF Industries ( CF) was a buy on pullbacks after activist investor Dan Loeb revealed that he has a position in the company and that the stock can pay out a much bigger dividend.

The United States Natural Gas ETF ( UNG) was the first discussed during the show's "Pops & Drops" segment after closing down roughly 2.5% on Monday. Steve Grasso said that he was not a buyer over the long-term due to the supply glut of natural gas.

Next up was Apple ( AAPL) and Najarian said that it appears traders have turned bullish on the tech giant, citing large upside call buying outpacing puts by a ratio of 2 to 1.

After being down over 25% on Friday, Expedia ( EXPE) saw a continuation on Monday, closing down another 2%. Nathan said that it closed on its lows and probably has more downside left, although near $40 it would be a buy.

For the show's "Street Fight" segment, Grasso argued the bullish facts for Deckers ( DECK). He said traders should be buying this stock now, before the products will be in demand in the fall and winter.

Adami took the bear side, saying the last quarter was awful and so was the guidance provided. He cited poor operating margins and a bearish technical setup, known as a 'head-and-shoulders' pattern, as reasons for why the shorts have this one right.

Taking Monday's after-hours market traders by surprise was the early release of U.S. Steel Corp ( X) quarterly earnings results. The company was originally scheduled to release the results Tuesday morning. Nevertheless, the company reported better-than-expected earnings per share on lower-than-expected revenue, causing shares to move higher.

Adami said that he would not try to fade this move, citing that the stock has been crushed over the last few years and could be near the bottom of its range.

Guess Dennis Gartman said he's looking for a continued move higher in gold. Taking it one step further in the metals market, he is also short copper, citing the growing world inventory as his main reason. Quickly switching topics, he said he continues to like equities all around the world -- although the Nikkei has been hurting over the last several weeks.

Both Pfizer ( PFE) and Merck ( MRK) report earnings on Tuesday before the bell and Nathan said they are cheap, have good technical setups and solid yields.

Najarian said Facebook ( FB) could continue to move higher, even though it's up 34% in the past week after reporting blowout second quarter results last week. He added that options could be signaling a sharp move higher in the next month, to $40.

Masco ( MAS) beat on the top- and bottom-line on Monday after the close and Adami pointed to the strong operating margins. He added the home improvement story was intact and that he was a buyer of Home Depot ( HD).

Nathan said that he was not a buyer of Starbucks ( SBUX) yet, but that the company is phenomenal and has strong earnings growth. He is a buyer on the pullbacks.

Grasso said he would not be a buyer of 3D Systems ( DDD) or Stratasys ( SSYS), but would trim profits in them if he was long.

For their final trades, Adami was a buyer of BorgWarner ( BWA), saying it's headed toward triple digits. Najarian was a buyer of Valero Energy ( VLO), saying the selling was overdone in the refiners. Nathan is a buyer of Zynga ( ZNGA) and Grasso a buyer of Deckers.

-- Written by Bret Kenwell in Petoskey, Mich.

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

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.

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