'Fast Money' Recap: A Knee-Jerk Reaction

NEW YORK ( TheStreet) -- The broader markets ripped to all-time highs when the Federal Reserve announced it would not cut back on any of its bond-buying efforts.

On CNBC's "Fast Money" TV show, Brian Kelly said he was surprised the Fed decided not to taper and noted the central bank is concerned about the fiscal drag on the economy from the sequestration.

Dan Nathan said the market move was a knee-jerk reaction higher, but he doesn't necessarily want to chase the move. At the same, he argued the breakout to new highs was quite powerful.

Guy Adami said that at some point the lack of earnings growth will come into play. He still thinks a short Caterpillar ( CAT) position works.

Mike Khouw expected there to be no tapering because of the poor economic data. He added that stocks no longer look cheap, especially when the economy is not growing, because that means there's no top-line growth.

Gold also jumped on the Fed news and Kelly said investors can continue to own the yellow metal.

Seymour argued that the rally in gold is getting long in the tooth and this is one more move traders are chasing and will eventually get stung.

Tom Lee, chief U.S. strategist at J.P. Morgan, said Wednesday's move proves investors were underweight equities. He added that the Fed's decision will likely set the market up for the rest of the year and likes tech, financials and healthcare. He concluded that investors feel more comfortable in the market with the Fed's accommodation.

Housing starts are up and housing permits are down, according to the most recent data for August. Kelly said home building might start to pick up and Seymour said the data seem good. However, he is looking to fade the recent move higher.

Khouw concurred that fading the homebuilders was a good trade. He added that these stocks are very interest rate-sensitive and the valuations are "far from cheap."

Oracle ( ORCL) reported earnings, and Nathan said the stock is a buy near $30 or $31.

Adami said the guidance was lousy and likes the $31.50 level for longs, but warned that if that level doesn't hold, it could head much lower.

Apple ( AAPL) was the first stock on the show's "Trending Trades," and Nathan said the iPhones received very good reviews on Wednesday. He thinks next week's data regarding the sales for these units will be the next big catalyst.

Take-Two Interactive ( TTWO) recently released the videogame "Grand Theft Auto V." Khouw said the stock is pretty close to fair value.

Priceline.com ( PCLN) hit $1,000 per share, and Adami said the stock is not that expensive on a valuation basis. He added that investors could stay long.

Kelly called the utility sector the "safe haven" of stocks for two reasons: the strong dividends and lower interest rates, the latter of which will making borrowing cheaper.

Jens Nordvig, global head of currency strategy and co-head of global markets research Americas at Nomura Securities, was a guest on the show and said he was very surprised by the Fed's action. He added the move will hurt the value of the U.S. dollar and emerging market currencies would be good buys. He concluded he likes, Mexican, Brazilian and Malaysian currencies.

Starbucks ( SBUX) hit an all-time high Wednesday. Adami said while he likes the stock, Dunkin' Brands ( DNKN) is giving investors the most bang for the buck.

Seymour said that even though Starbucks may seem expensive, its future growth and international expansion justifies it.

Seymour said there's still a lot of money on the sidelines that will go towards emerging markets, but he doesn't want to chase the recent move higher.

Kelly concurred that buying emerging markets on Thursday would be tough, but said he would rather buy the iShares J.P. Morgan USD Emerging Markets Bond ETF ( EMB) at this point.

Adobe Systems ( ADBE) was the first stock on the show's "Pops & Drops" segment. Adami said longs should take profits and that traders shouldn't chase the stock, since it has limited upside from here.

Electronic Arts ( EA) fell 2%. Nathan said investors don't need to chase it since it's up 85% year to date, but those already long can use $26 as their stop-loss.

Dollar Tree ( DLTR) jumped 3% and Kelly said investors should take profits.

Pandora ( P) popped another 2% and Seymour said he would avoid the name.

AvalonBay Communities ( AVB) was up 4% and Khouw said he would take profits based on valuation.

For their final trades, Kelly said to buy gold and Adami was buying Nucor ( NUE). Khouw was a buyer of Deere ( DE) and a seller of Caterpillar as a pairs trade and Nathan took profits in General Electric ( GE).

-- 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.