'Fast Money' Recap: Negative Pre-Announcements

NEW YORK (TheStreet) -- The S&P 500 sold off Friday, closing lower by almost 0.5%. 

On CNBC's "Fast Money" TV show, Josh Brown, CEO and co-founder of Ritholtz Wealth Management, said that 94 companies in the S&P 500 have pre-announced negative earnings, a seven-year high. But he said the magnitude of the lowered estimates are much lower than the average, and so far Wall Street seems fine with it. It allows the corporations to keep estimates realistic. 

Steve Grasso, director of institutional sales at Stuart Frankel, said that investors continue to buy the dips and there is support near 1,815 in the S&P 500. 

Pete Najarian, co-founder of optionmonster.com and trademonster.com, said the S&P 500 has been mostly rangebound between 1,825 and 1,845. He added that the selloffs in individual stocks are being bought intraday and the low volatility levels suggest investors aren't scared. 

Guy Adami, managing director of stockmonster.com, said International Business Machines (IBM) held the $175 level but seems to have only gone higher because of a rising broader market. He suggested the stock could "get whacked" after it reports earnings on Jan. 21. Grasso concurred. 

Brown said investors shouldn't short-sell IBM since it has a low value and famed investor Warren Buffett has been buying. That said, Brown said the stock is not a buy either.

CNBC's Sarah Eisen was a guest on the show. She said China's "shadow banking" could cause a ripple effect in the Chinese financial markets if some of the "sketchy investments" from a non-bank financial intermediary don't work out. The ripple effect could sting the country's economy but shouldn't be a worry for U.S. investors at this time, she concluded. 

Brown said investors who want to be long China should focus on the Chinese consumer, online shopping and "urbanization." 

Najarian said Baidu (BIDU) and Sina (SINA) have not traded well, something on which investors should pay attention.

Adami said there seems to be value in the gold mining companies. 

Najarian suggested traders looking to buy and sell Twitter (TWTR) follow the Goldman Sachs (GS) upgrades and downgrades, which have been fairly accurate. 

Brown said he doesn't want to own Yahoo! (YHOO) for technical reasons. He suggested investors buy SoftBank (SBTBF) if they are looking for exposure to Alibaba. 

General Electric (GE) reported in-line earnings Friday morning. Adami said margins are improving and the company is shifting away from its financial services business, which is an important move. Technically, the stock held $26 and is still in an uptrend. 

Najarian said GE has a strong backlog and is doing really well in the U.S.

Dr. Yaron Werber, who leads Citigroup's biotechnology research team, was a guest on the show. Clovis Oncology (CLVS) has a lot of upcoming tests and positive results would be a catalyst to push the stock higher. Another top pick of his is Medivation (MDVN), which should benefit from strong prostate cancer drug sales. He has a buy rating and $70 price target on the stock. 

Grasso said he is staying long CLVS. 

Alcoa (AA) hit a two-year high and Grasso was a buyer after it broke through strong resistance near $11. He added that above $11.77 the stock could have a ton of upside. 

Najarian pointed out the strong, bullish call buying in the April 18 call options for Ford (F). 

For their final trades, Brown said to buy HomeAway (AWAY) and Adami is buying Jack In The Box (JACK). Najarian said to buy Johnson & Johnson (JNJ) and Grasso is a buyer of AA. 

-- 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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