'Fast Money' Recap: Worrying About the Fed, Again

NEW YORK (TheStreet) -- Investors pushed equity markets lower because of renewed fear the Federal Reserve will cut back on its current economic stimulus.

On CNBC's "Fast Money" TV show, Brian Kelly, founder of Brian Kelly Capital, said the S&P 500 could now pull back to 1,750 since 1,786 failed as support. 

Stuart Frankel & Company's Steve Grasso said everyone has been wrong about whether the Fed would taper its asset purchases so far, so investors shouldn't worry about it just yet. He suggested investors stay long the stocks they love. 

Josh Brown, a financial adviser at Ritholtz Wealth Management, said investor sentiment is at levels that have generally led to 5% pullbacks. 

Dan Nathan, co-founder and editor of riskreversal.com, said the pullback isn't surprising when one considers the recent decline in European stocks. He added that rising interest rates could also be partly responsible for the decline. 

Regarding Twitter (TWTR), Kelly said investors should wait for a pullback to $45 before buying. He added that strong support was near $40. 

Brown said TWTR could pull back when it reports earnings and when share lockups expire. 

Trisha Dill, the senior analyst at Wells Fargo who upgraded Groupon (GRPN), was a guest on the show. She said the company has a ton of potential and has a sizable customer base. That customer base helps defend it against competition. 

Nathan said the stock is not a long-term hold because of its upcoming competition with Costco Wholesale (COST) and Amazon (AMZN) through direct selling. 

Grasso called Home Depot (HD) the best way to play the housing recovery. He added that operating margins should expand significantly by January 2015.

Nathan said he is looking to cover his Pandora (P) short at $25, and suggested investors could look to buy near that level. 

Brown said Bank of America (BAC) could initiate up to $25 billion in share buybacks, which he said could be a huge catalyst in 2014. 

Nathan likes BAC and also suggested Goldman Sachs (GS) could break out in January. 

Facebook (FB) will join the S&P 500 and S&P 100, giving the stock a boost in after-hours trading. Kelly suggested investors do not buy the pop. 

Grasso said "old people" use FB while young people used TWTR. He prefers TWTR over FB.

Nathan countered that the younger generation likes Instagram, which is owned by FB and needs to be better monetized. 

Brown said he would buy LinkedIn (LNKD) over FB. 

Mark Mahaney, managing director and analyst at RBC Capital, was a guest on the show. He said adding FB to the S&P 500 is one of three current catalysts on the stock, the others being monetizing Instagram and video advertising on the FB platform. He said the chatter about teenage disengagement with FB is overblown. He has a $60 price target on the stock. 

Abercrombie & Fitch (ANF) will be dropped from the S&P 500. Kelly said he would be a buyer on the news since the selloff is usually an overreaction. 

Eddy Elfenbein, author of Crossing Wall Street, was a guest on the show who said rising interest rates and the widening spread between the two-year and 10-year Treasury yields suggests the economy is strengthening. He said the rising ISM reaffirmed this notion. 

Kelly said he bought put options on the SPDR S&P 500 Trust ETF (SPY) as a hedge to his long S&P futures because volatility is cheap. 

For their final trades, Kelly is selling the SPDR Gold Trust ETF (GLD) and Grasso is buying TWTR. Brown is buying General Motors (GM) and Nathan said to sell Wal-Mart (WMT).

-- 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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