'Fast Money' Recap: Going With the Market's Flow

NEW YORK (TheStreet) -- The S&P 500 climbed 12.5 points to close at a record high of 1,940.46 on Thursday. 

On CNBC's "Fast Money" TV show, the trading panel took a look at today's action. 

Brian Kelly, founder of Brian Kelly Capital, said the European Central Bank seems to have given the all-clear signal to investors ahead of Friday's nonfarm payrolls report. Kelly bought German stocks, sold oil and copper and covered his short position in gold. 

Karen Finerman, president of Metropolitan Capital Advisors, said she bought protection in the form of SPDR S&P 500 Trust ETF (SPY) put options because the CBOE Volatility Index (VIX.X) is so low, now below $12. 

Dan Nathan, co-founder and editor of riskreversal.com, asked, what's to stop the Russell 2000 from re-testing its previous highs? He is a buyer of quality stocks with reasonable valuations such as Cisco Systems (CSCO), Ford (F), and General Electric (GE). 

Pete Najarian, co-founder of optionmonster.com and trademonster.com, agreed with Finerman's decision to buy portfolio insurance in the form of SPY puts. He reiterated that the record low levels of volatility makes it extremely cheap for investors to use options as downside protection. 

Chris Verone, head of technical analysis at Strategas, told traders not to fight the trend. With the breakout over 1,925, the S&P 500 looks likely to challenge the 1,980 to 1,990 level. However, the index is slightly overbought so it could pullback to the 1,910 level, which he called a buying opportunity. Tenet Healthcare (THC) is his top pick and he has a $77 price target. 

Najarian said Citigroup (C) and Goldman Sachs (GS) continue to trade "extremely" well on the long side. He said Citigroup could rally to $60 if it begins spinning off foreign assets. Finerman said she is long Citigroup because it is undervalued.

Nathan argued that the risk-to-reward of being long the broader stock market doesn't look that attractive at current levels. Kelly suggested that investors stay long with "tight" stop-loss. His stop-loss in the S&P 500 is 1,908. 

Nathan said Amazon (AMZN) is likely to lose money on the reported smartphone the company is working on. Najarian added that it's tough to buy shares of Amazon due to the "razor thin" margins and incredibly high PE ratio. 

Dan Ives, managing director at FBR Capital Markets, has a buy rating on shares of Microsoft (MSFT) with a $49 price target. He argued that if mobile and cloud users begin to show larger adoption rates of Office 365, the company could eventually add 40 cents to its earnings per share figure. He added that free-cash flow seems likely to expand and the company can hopefully take market share in the smartphone market. He admitted that Microsoft's acquisition of Nokia's (NOK) handset division could have issues in the future. 

Nathan said Microsoft is unlikely to amass a 10% market share in the smartphone market. However, he said investors can buy the stock because of the strong balance sheet and the dividend yield. 

Najarian agreed with Nathan but added the stock looks likely to break through $42 and make run toward $50.

Finerman said she is long Softbank because it is a "great allocator" of capital and owns a significant stake in Alibaba. 

Najarian said Baidu's (BIDU) $1 billion debt offering has investors excited about what the company could be doing with the funds, which is most likely tied to M&A activity. He said he likes the stock at current levels due to its dominance in the Chinese Internet search engine. 

Nathan said Twitter (TWTR) could be forming a bottom near $30. He is long call options. 

Lululemon Athletica (LULU) was the featured company on the show's "Street Fight" segment. Nathan was the bull, arguing that sentiment for the stock is very poor and its high short-interest could allow for a pop following its earnings release. He added the new CEO is unlikely to provide lowered guidance for the next quarter. 

Kelly disagreed, and argued that Lululemon Athletica's margins could continue to compress as competition from Nike (NKE), Under Armour (UA) and Gap (GPS) increases. He added the company's strong growth phase is in the past and the stock's technical setup looks quite bearish as it could soon break long-term support. 

Najarian admitted that LULU has lost market share over the past year but said he believes the company can make a comeback. 

Ben Baldanza, CEO and president of Spirit Airlines (SAVE), said his company is very transparent with its fees and fares, the latter of which he called the "lowest" in the industry. He added that Spirit will be purchasing its planes, not leasing them. This should save the company roughly $840,000 per plane, he reasoned, a savings that will be passed along to its customers. It will also allow for tax advantages. 

Kelly suggested that SAVE could make a big move to the upside, much like the recent price action in shares of JetBlue Airways (JBLU). Najarian said he continues to like Delta Air Lines (DAL) on the long side. 

Whole Foods Market (WFM) jumped 4% and was the first stock on the show's "Pops & Drops" segment. Nathan said there was takeover chatter in the name. While consolidation in the industry is likely, the premiums paid over today's prices are likely to be small, he said. 

Vera Bradley (VRA) fell 5%. Finerman said the company released an "awful earnings" report, and told investors to avoid the name for a little while. 

Joy Global (JOY) climbed 7%. Kelly said he would "fade" this move higher. 

Clovis Oncology (CLVS) jumped 6%. Najarian said the stock was upgraded, but the price action only seems like a short-term bounce. 

Shares of Apple are up roughly 23% since reporting earnings in late April. Nathan pointed out the large call buying activity in the stock but said he is not a buyer at current levels. 

Najarian said after the stock split, shares of Apple seem likely to continue on with upside momentum. He also pointed out the bullish call buying activity in shares of Nike, specifically the $77 July call options. 

Nathan called shares of Netflix (NFLX) "not tradable" at current levels. However, he is a buyer of Verizon (VZ) near $48. 

Kelly said over the short term, the broader market can slowly move higher. He said the biggest risk to the macro economy is in the junk bond market. 

Nathan said that although the CBOE Volatility Index fell 3% on Thursday, there was some noticeable call buying activity. Specifically, the 144,000 July $13/$16 bull call spreads that were bought for 19 cents apiece stood out. 

Najarian said he is long Zynga (ZNGA) for a bounce to the upside, not because it's a takeover target. 

Finerman said she is still long Bank of America (BAC) with a long-term outlook. 

For their final trades, Najarian is buying CSX Corp. (CSX) and Finerman is a buyer of SPY puts. Kelly is a seller of Freeport-McMoRan (FCX) and Nathan is a buyer of TWTR. 

-- 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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