'Fast Money' Recap: No 'All Clear' for the Markets Yet

NEW YORK (TheStreet) -- Despite many investors' expectation that equities would sell off from the U.S. government shutdown, the broader market rallied on Tuesday.

On CNBC's "Fast Money" TV show, Brian Kelly was surprised by gold's move lower and said market participants are now expecting a further delay to tapering due to the government's action.

Jim Lebenthal said he doesn't believe GDP will suffer as a result to the shutdown. He added that it should only last a few days and that the pullback is a buying opportunity.

Guy Adami said the S&P 500 will probably trade up to roughly 1,710, which will be an important level for determining where it goes next. Ultimately, he thinks the index will break below 1,670 after going higher.

Dan Nathan said the markets do not have the "all clear" sign quite yet, but a resolution in Washington should push the S&P 500 above 1,700. He added that the upcoming debt ceiling debate could pressure it back down to 1,650.

Mike Khouw doesn't like the valuation of the market and believes that it will likely trade lower. He added that traders could stick with names like Priceline.com ( PCLN) because of its strong and consistent growth.

Regarding Apple ( AAPL), Lebenthal said the incoming cash flow is tremendously strong and the share price will eventually reflect that.

Adam Parker, chief U.S. equity strategist at Morgan Stanley, called 2013 an interesting year because expensive growth stocks continue to get more expensive and hated stocks have now doubled or tripled. Regarding the government shutdown and upcoming debt ceiling debate, he said it should only slightly affect GDP in a negative way. He added that earnings should improve modestly in the third quarter and he likes industrials, technology and health care.

Netflix ( NFLX) made new highs and Nathan said it is not a good time to initiate new positions. Kelly added that investors should lighten up or hedge stocks when they go parabolic.

Adami said Netflix reports earnings later this month and that it will probably continue to grind higher until then, but investors should not take their whole position into the report without taking Kelly's advice.

On gold, Kelly reiterated that he's surprised by its price reaction to all of the issues in Washington. With negative real-interest rates and ongoing quantitative easing, he concluded that the market is incorrectly pricing gold.

Merck ( MRK) was the first stock on the show's "Pops & Drops" segment. Nathan said the job slashing is good for the company and bad for the labor market.

McKesson ( MCK) jumped 2.5% and Khouw said the stock is near the upper end of its historical valuation range. He advised using this pop to take some profits.

Chicago Bridge & Iron ( CBI) popped 3%. Adami said the stock is not overly valued and thinks investors can stay long.

Walgreen ( WAG) moved up 4% on Tuesday and Lebenthal said its earnings report shows consumers are starting open their wallets and spend some money.

H&R Block ( HRB) popped 4.5%. Kelly said the company should benefit from the Affordable Care Act. He advised traders on the long side to use $26 as their stop-loss.

Ford ( F) was the featured stock on the show's "Street Fight" segment. Lebenthal defended the stock, saying the global economic recovery is helping to drive demand. He added Ford is undervalued, has a solid dividend yield and builds high-demand vehicles.

Kelly disagreed, arguing the company's inventories continue to increase and so do the incentives, and incentives should not be increasing if demand remained strong. He added that industry sales growth is starting to slow and it's time to take profits after the big run.

Yaron Werber, director and senior analyst at Citigroup, was a guest on the show and said the Food and Drug Administration will remain open because of surplus funding, which will allow late-stage drug testing to continue. However, early-stage applications will not be accepted by the FDA if the government shutdown lasts for too long. Ultimately, the longer the shutdown lasts, the bigger effect it will eventually have on the biotech sector.

Lions Gate Entertainment's ( LGF) CEO Michael Burns was a guest on the show and said it's a good sign that roughly three-quarters of its online tickets sold out for its upcoming film The Hunger Games: Catching Fire. He added that he expects this film, the second of the trilogy, to do much better internationally than the first film, which brought in about $280 million from overseas.

Nathan said sales aren't growing as much as they should and investors should not buy into the stock at current levels.

For their final trades, Kelly said to buy the iShares MSCI Emerging Markets ETF ( EEM) with a stop-loss at $40. Nathan said he was a buyer of Exxon Mobil ( XOM) with a stop-loss at $86. Khouw said to sell upside calls against a long Lions Gate Entertainment position, Lebenthal was buying Corning ( GLW) and Adami was a buyer of Mylan ( MYL).

-- 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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