'Fast Money' Recap: Build on Housing?

NEW YORK ( TheStreet) -- The broader market rallied Thursday morning before giving back some of those gains to end the day slightly higher.

The housing market was the opening topic on CNBC's "Fast Money" TV show, and Brian Kelly said he wouldn't worry about rates going higher in the short term. However, he added that traders should watch for the Chicago PMI number on Friday. If the data is strong and rates sell off, then traders should sell housing.

Guy Adami said he continues to like the SPDR S&P Homebuilders ETF ( XHB) on the long side, above $28.

Dan Nathan said the homebuilders topped out in the beginning of the year and won't regain the same momentum. He added that when Home Depot ( HD) reported strong earnings a few weeks ago, the stock still sold off.

John Najarian said he doesn't like the Homebuilder ETF because of the broad range of companies in the fund, but he does like the individual homebuilders.

Mike Khouw said that being long the housing market is like being short mortgage rates, which are near historic lows -- a trade he does not favor.

Salesforce.com ( CRM) reported earnings on Thursday. Adami said don't chase the stock on Friday as it will be near stiff resistance.

Ed Yardeni, president of Yardeni Research, was a guest on the show and said there's nothing new to uncover in this bull market. He added that some consumer discretionary names, particularly retail, were getting a little expensive and he believes the market will trade sideways for the next couple of months.

Kelly said those who believe the spike in oil is only temporary and the Federal Reserve will postpone the tapering date could look to buy the WisdomTree India Earnings ETF ( EPI) with a stop at $12.95.

Vodafone ( VOD) was the first stock on the show's "Trending Trades" segment after confirming it is in talks to sell its stake in Verizon Wireless to Verizon Communications ( VZ) in a deal potentially worth over $100 billion.

Najarian said it makes sense for Verizon to do this because the company will never likely be able to borrow money this cheap again.

Nathan said Chipotle Mexican Grill ( CMG) could be benefiting from middle-class consumers, but if it starts to break down it could head much lower and very quickly.

International Business Machine ( IBM) was the featured stock on the show's "Street Fight" segment. Najarian said the company should get a boost from its cloud computing segment, saw its backlog jump 3% and also provided strong guidance.

Adami argued the stock has been missing on top-line growth while only growing the bottom line with share buybacks. He added that the company has limited organic growth and weak cash flow.

Guess? ( GES) was the first stock on the show's "Pops & Drops" segment after it popped 13%. Adami said investors should take profits in the stock, not chase it.

Campbell Soup Company ( CPB) dropped 3%. Nathan said the valuation was too high for the current earnings growth rate.

After falling 2% on a negative analyst note, Najarian said the cloud space is hurting Seagate Technologies ( STX).

U.S. Airways Group ( LCC) was up 4%, but Kelly said he would avoid the name.

The Fresh Market ( TFM) dropped 12% on weak guidance. Mike Khouw said this is what happens when companies with a rich valuation, disappoints investors.

In a CNBC exclusive, guest Gary Schoenfeld, the CEO of Pacific Sunwear ( PSUN), said the expectations for management execution are higher than ever, with teen retailers experiencing some recent headwinds. He added that his company's focus on consumers in their late teens and early twenties, combined with new brands and styles, has significantly boosted sales.

Adami said the stock might be worth a look, especially with declining inventories -- meaning margins could improve. He added that if the guidance was intentionally "sandbagged," then the stock could be interesting on the long side.

Najarian said he likes National Oilwell Varco ( NOV), which is a play on shale. He added that he also likes the energy sector.

Kelly likes Suncor Energy ( SU) and said the stock seems to have significant support near $30.

Nathan is a fan of Wal-Mart ( WMT) because of its yield, consistent earnings and low valuation.

For their final trades, Kelly was a buyer of Apache Corp. ( APA), Najarian was buying Myriad Genetics ( MYGN) and Nathan said to sell short or take profits in Tesla Motors ( TSLA), depending on your current position. Khouw said to short The Fresh Market via short call spreads and Adami said to buy the Homebuilders ETF.

-- 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.

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