'Fast Money' Recap: A Rational Rally

NEW YORK (TheStreet) -- The S&P 500 continued its rally, closing higher by 1.09% after the Federal Reserve released its Federal Open Market Committee minutes. 

On CNBC's "Fast Money" TV show, Guy Adami, managing director of stockmonster.com, said the market bounce seems perfectly rational and could continue. 

Dan Nathan, co-founder and editor of riskreversal.com, said some of the momentum names such as Facebook (FB) could rebound and make new highs. However, stocks such as Pandora (P) and Yelp (YELP) may never make new highs. 

Pete Najarian, co-founder of optionmonster.com and trademonster.com, pointed out the S&P 500 has remained rangebound between 1,845 and 1,885 since mid-February.

Karen Finerman, president of Metropolitan Capital Advisors, was unimpressed with the bounce in many names, such as United Rentals (URI), considering the selloff many stocks had over the past few weeks. 

Robert Peck, managing director at SunTrust Robinson Humphrey, said online advertising volumes have remained stable while ad pricing has gone up quarter over quarter. This is a direct benefit to a company such as Facebook, he said.

Advertisers are getting a higher return on investment for their ad dollars and so they are willing to spend more. Peck forecasts Facebook will generate $2.4 billion in revenue and have 50% margins next quarter. 

Najarian said he likes Facebook but is waiting for a pullback to buy after its strong rally on Wednesday. 

After the two-day rally, the panel was searching for stocks to sell on the strength: 

Najarian was a seller of Caesars Entertainment (CZR) and Nathan was a seller of Yelp, although he admitted it could move higher in the short term. Finerman was a seller of the broader market via the SPDR S&P 500 Trust ETF (SPY) and Adami was a seller of International Business Machine (IBM).

Adami said investors could buy shares of Bed Bath & Beyond (BBBY) near $62 because of its low valuation. Finerman agreed. 

Jim Whitehurst, CEO and president of Red Hat (RHT), said Amazon (AMZN) and Google (GOOG) are both good customers. Regarding the company's recent, negatively perceived guidance, he admitted margins would decline but free-cash flow would increase. Although it's a bullish sign, some analysts didn't seem to get the message, he concluded. 

Nathan pointed out shares of Red Hat don't look attractive at current levels. 

Ally Financial (ALLY) priced its initial public offering at $25. Finerman said the stock will trade at a slight discount to its tangible-book value, but suggested investors not buy it on the first day. 

Adami said General Motors (GM) might decline to $32.50. 

Najarian said investors who are long the common stock should try buying longer-term put options on GM for protection in case the stock continues to slide. 

Michael Bell, general manager for new devices group at Intel (INTC), said his company isn't looking to make wearable devices but provide the technology inside the devices for other companies. Aside from "smart watches," he demonstrated a "smart bowl," which charges consumers devices simply by dropping them in the bowl. 

Najarian likes INTC and is bullish on its mobile business. Nathan said shares of INTC still have a nice dividend yield after a big upside move since January. 

Monster Beverage (MNST) jumped 5% and was the first stock on the show's "Pops & Drops" segment. Adami said the stock seems likely to move higher. 

Hershey (HSY) fell 3%. Finerman said a downgrade from Goldman Sachs is what triggered the selloff. 

Intuitive Surgical (ISRG) dropped 7%. Najarian was a buyer near $440. 

Although he was not a buyer, Nathan pointed out the bullish options activity in FireEye (FEYE), where one trader bought 3,000 May 55 call options for $6. The breakeven point on the stock is at $61. 

George Goncalves, head of U.S. interest rates strategy at Nomura Securities, said interest rates are set to move higher -- just not anytime soon. He added the 10-year Treasury yield is likely to remain within its range of 2.50% to 3%.

Contrary to what many investors believe, Adami expects Treasury yields to fall. He said the iShares 20+ Year Treasury Bond ETF (TLT) could climb to $115. 

Nathan said the global economy would be in trouble if the U.S. 10-year Treasury fell to 2%. 

Najarian said shares of F5 Networks (FFIV) were breaking out to the upside. 

Nathan was a selling the iShares MSCI Germany ETF (EWG) via long put options. 

Adami said investors should start taking profits in Archer Daniels Midland (ADM) unless it can break out above $48. 

Finerman said it doesn't matter if investors buy Google class A shares (GOOGL) or Google class C shares (GOOG). She suggested buying whichever is cheaper, even if the difference is only marginal. 

Nathan said investors could buy First Solar (FSLR) near $60 if they believe in the long-term story. 

Najarian said he liked shares of MannKind (MNKD) on the long side. However, he advised investors to use options in order to define their risk. 

For their final trades, Najarian was a buyer of Cheniere Energy (LNG) and Finerman was a buyer Bank of America (BAC). Adami was buying Delta Air Lines (DAL) and Nathan said to buy the Market Vectors Gold Miners ETF (GDX).

-- 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.

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