NEW YORK (TheStreet) -- The S&P 500 and Dow Jones Industrial Average both closed at all-time highs.
Guy Adami, managing director of stockmonster.com, said many momentum stocks have formed a short-term bottom. He added that Twitter (TWTR - Get Report), LinkedIn (LNKD) and Netflix (NFLX - Get Report) all look poised to continue higher this week.
Brian Kelly, founder of Brian Kelly Capital, said he is not tempted to buy momentum stocks, which he called "broken." He added that the economy is not strong enough to justify the valuation of these high-flying stocks.
Steve Grasso, director of institutional sales at Stuart Frankel, who is long Twitter (TWTR - Get Report) and Amazon (AMZN - Get Report), said investors should buy momentum stocks now. He is not a buyer of the overall market, though.
Karen Finerman, president of Metropolitan Capital Advisors, reasoned that just because momentum stocks have gotten cheaper over the past month, doesn't make the stocks cheap in valuation.
CNBC's David Faber was a guest on the show. He said International Business Machine (IBM - Get Report) had a rough first quarter of earnings as sales continued to underwhelm investors. However, the company is making a move out of its slower growth businesses and into higher growth, higher margin businesses, he added. However, a turnaround is hard to pull off for a company the size of IBM, he acknowledged.
Grasso said the stock seems poised to go lower. He reasoned that the stock is only higher because investors have been rotating out of high-growth stocks and into blue-chip stocks.
Adami agreed, saying he feels comfortable being short IBM. He added that if the market takes a turn for the worse, IBM will underperform.
Kelly pointed out that IBM using almost all of its cash-flow to repurchase shares. With cash flows shrinking, the share buyback will slow and therefore the stock will be less valuable as earnings per share growth slows, he reasoned.
Adami said Rackspace Hosting (RAX) can climb to the mid- to upper-$30s. He suggested investors wait a few more days before considering short-selling the stock.
Kelly said investors who are long shares of Twitter should take profits after the recent bounce.
Finerman said investors in General Motors (GM - Get Report) appear to have fully digested the negative news as the stock has held up quite well over the past few weeks. Grasso said investors who are long General Motors should use $34 as their stop-loss. He was a buyer of Ford (F - Get Report).
Finerman called the 20% revenue decline at Elizabeth Arden (RDEN) "absolutely awful."
Steven Dennis, former vice president of corporate strategy at Sears Holdings (SHLD), was a guest on the show. He said the current management is not addressing its core issue, which is the failure to provide the right products in the right locations. He added that the key items consumers want are being delivered by Home Depot (HD - Get Report), Lowe's (LOW - Get Report), and Best Buy (BBY - Get Report).
Kelly called shares of Sears a "no touch." Adami said investors cannot short Sears because of its 60% short interest. He suggested that investors buy the stock as a trade if there is positive news that starts to rapidly push the stock higher.
Grasso suggested that Amazon is also contributing to Sears' pain in the traditional retail space.
Chris Verrone, head of technical analysis at Strategas Research Partners, argued that Monday's rally may not be as healthy as it initially appeared, with only 60% of the S&P 500 stocks trading above their 50-day moving averages.
Verrone added that the market can either correct in price (in the form of a decline) or in time, where prices tend to remain rangebound. It appears that the broader market may have corrected over time, he suggested. It seems likely the S&P 500 will test its 200-day moving average sometime this summer, he concluded.
Dennis Gartman, editor and publisher of The Gartman Letter, pointed out the recent strength in aluminum, tin, copper and nickel. Nickel has had supply issues, which could cause the price to go higher. However, Gartman reasoned that all of the metals have moved higher in unison, suggesting the Chinese economy as well as the global economy will do well.
Kelly said he is long gold because of the Indian elections and upcoming wedding season in the country, a time when gold is in heavy demand.
VeriFone Systems (PAY) was the first stock on the show's "Pops & Drops" segment. Grasso said the stock seems poised to move higher.
Tony Alexander, president and CEO of FirstEnergy (FE - Get Report), said consumers will continue to need reliable and affordable energy, which cannot be delivered solely by renewable energies such as solar and wind power. He argued that three billion people in the world do not have access to power, and when they do it will come from fossil fuels -- such as coal and natural gas. In the long term, renewable energy will be more vital but for now fossil fuels are still a much needed energy source, he concluded.
Grasso said investors should buy into the beaten-up coal sector via a "basket" of stocks. However, he did not suggest specific companies or an exchange-traded fund.
For their final trades, Adami was a buyer of U.S. Steel (X - Get Report) and Finerman said to buy Gaming and Leisure Properties (GLPI - Get Report). Grasso was a buyer of Potash (POT) and Kelly said to buy the Market Vectors Gold Miners ETF (GDX - Get Report).
-- Written by Bret Kenwell in Petoskey, Mich.