'Fast Money' Recap: The European Central Bank and Bonds

 

NEW YORK (TheStreet) -- The S&P 500 slid 0.15% while the iShares 20+ Year Treasury Bond ETF (TLT) fell 1.22% and is down 2.6% on the week. 

On CNBC's "Fast Money" TV show, Guy Adami, managing director of stockmonster.com, said he remains bullish on bonds and thought bond yields have more room to the downside. He is a buyer of the TLT if it opens lower on Friday, but admitted that Thursday's price action concerns him. 

Brian Kelly, founder of Brian Kelly Capital, said investors seem confused on what to do following the significantly lower drop in the euro on Thursday. When investors are confused they will not make the "extra effort" to buy stocks. 

Tim Seymour, managing partner of Triogem Asset Management, thinks the stock market wants to go lower because it cannot seem to rally on good news. 

Jon Najarian, co-founder of optionmonster.com and trademonster.com, said the 10-year Treasury yield seems likely to drop to 2.20%. However, lower rates will be driven by global investors' demand for Treasury bonds, which isn't a bad thing, he argued.

Dennis Gartman, editor and publisher of The Gartman Letter, said the euro is likely to continue weakening. Investors should use this opportunity to buy gold with the euro currency. He reasoned that the European economy is "waning" and lagging the U.S. 

Adami said that a stronger U.S. dollar will create headwinds for some U.S. companies that operate internationally. Seymour said the euro still has more downside ahead. He is a buyer of German exporters, such as Siemens (SI) . 

Najarian said investors shouldn't sell U.S. stocks simply because of a stronger dollar. However, it may have a negative effect of margins, he said.

Kelly said investors should stay long El Pollo Loco (LOCO) for the time being. Seymour suggested stocks like El Pollo Loco do well in bull markets but do terribly during market declines. 

Seymour said he would "hold" Intel (INTC)  because it is fairly valued but faces a lot of resistance near $35. Adami said Intel has done well while the rest of the industry has sold off. Investors should stay long for now. 

Najarian said Intel and Broadcom (BRCM) seem poised to rally into year's end. 

Seymour said he is a buyer of Gap (GPS) over Michael Kors (KORS) . Adami said shares of Gap need to find support near $44, otherwise the stock could head to $40. Kelly said investors can buy Michael Kors and use $75 as their stop-loss. 

Najarian pointed out the bullish options activity in shares of Coach (COH)  , specifically in the February $41 call options. 

Andrew Teich, CEO and president of FLIR Systems (FLIR) , said the company's current infrared camera addition for Apple's (AAPL) iPhone retails for $349 on its Web site and on Apple's Web site and in its stores. The price will decline when volume and demand for the product increases. The company does well on the commercial side with other products, particularly from the government, which represents 20% of the company's revenue while 48% of revenue come from outside the U.S.

Adami said FLIR Systems isn't extremely expensive but it is very volatile. The stock looks interesting on the long side. Seymour argued FLIR does look expensive. However, he said investors shouldn't sell short the stock and should wait for a pullback to consider buying. Kelly agreed, arguing that margins could decline in the future.

Najarian said he would only use options to trade Tesla Motors (TSLA)  in order to reduce his risk. Seymour said he continues to avoid Tesla because the company is likely to struggle with production, margins and competition. 

Kelly and Adami said investors need to take some profits if they've been long Tesla. 

Ravi Shanker, lead auto analyst at Morgan Stanley, has an outperform rating and $46 price target on shares of MobilEye (MBLY) . Despite his price target, he said the stock can climb to $100 if no real competitors emerge in the next 12 to 18 months. The company should benefit from the focus on automobile software and autonomous driving. No competition seems imminent right now, he concluded. 

Adami said investors should stick with MobilEye until competition in the space creates commoditization. 

D.R. Horton (DHI) climbed 1% and was the first stock on the show's "Pops & Drops" segment. Kelly said that if interest rates move lower it is "very positive" for the homebuilders. If rates move lower he is buying the iShares U.S. Home Construction ETF (ITB) . 

BP plc (BP) dropped 6%. Seymour said the company's outlook isn't too bright, with exposure to Russia and fines possibly amounting to $18 billion for the Gulf of Mexico oil spill in 2010. 

Stratasys (SSYS) jumped 1%. Najarian attributed the gain in the stock price to positive analyst coverage from Morgan Stanley, which issued an overweight rating and $135 price target. 

Universal Display (OLED) popped 7%. Adami said the stock is not "ridiculously expensive" near current levels and could be a good trade if its products are featured in Apple's new products. Investors can stay long. 

Kelly likes Golar LNG Limited (GLNG) , which transports liquified natural gas. If its secondary pricing holds he is a buyer. 

Dr. Mark Sirgo, CEO and president of BioDelivery Sciences (BDSI) , said the company's new product, BEMA Buprenorphine, is a non-addictive painkiller that is being moved to Schedule III. This means it will be easier for doctors to prescribe the medicine for patients while painkillers like Vicodin and acetaminophen will be harder to issue because they are on Schedule II. The company is partnered with Endo International (ENDP) for the drug and is on track for an NDA Filing of late 2014 or early 2015.

Adami said shares of BDSI appear to have upside. Investors who are looking for a little speculation and can stomach the volatility can buy the stock. Seymour added the stock appears to have a decent risk-to-reward setup.

Najarian said investors should sell out of the outperforming Expedia (EXPE) and buy the underperforming Priceline.com (PCLN) . 

Kelly is a buyer of McDonald's (MCD) with a $92 stop-loss. 

For their final trades, Najarian is a buyer of Coach and Kelly is a buyer of bitcoin. Adami is buying Nuance Communications (NUAN) and Seymour said to sell the Direxion Emerging Markets Bull 3X Shares ETF (EDC) . 


-- 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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