NEW YORK (TheStreet) -- The S&P 500 continued Wednesday's gains, up 1.6% Thursday. The move higher has caused the volatility index to collapse, according to Jon Najarian, co-founder of optionmonster.com and trademonster.com.
The CBOE Volatility Index (VIX.X) saw a lot of bearish bets in the options market, which is good for the U.S. stock market as the two assets are inversely correlated, he said on CNBC's "Fast Money Halftime" show.
The S&P 500 is up impressively from Tuesday's low, said Josh Brown, CEO and co-founder of Ritholtz Wealth Management. While a rally always has the potential to fizzle out, the SPDR S&P Retail ETF (XRT) is making new 52-week highs, while small-caps appear on the verge of a breakout.
"I'm adding to my Morgan Stanley (MS) position in the Action Alerts PLUS portfolio," said co-manager Stephanie Link, who also serves as TheStreet's chief investment officer. Wednesday's price action in the S&P 500 was encouraging as the Federal Reserve signaled the U.S. economy continues to improve. It doesn't hurt that oil prices seem to have stabilized.
With oil near these levels, it's "unambiguously bullish" for the economy, Najarian said. Not just in the sense that 70% of U.S. GDP is comprised of consumer spending, but because businesses will have lower input costs. It's important that the commodity has found some footing and stopped declining each day, he said.
Robert Sechan, managing director at UBS Private Wealth Management, said volatility is increasing and should create buying opportunities in the future as global economies and central bank policies continue to change. He is not yet a buyer of energy stocks.
The Federal Reserve continues to remain cautious and pragmatic, Sechan said. Treasury yields are likely to stay low but can potentially rally to 2.6%. Geopolitical and high demand for Treasury bonds will help keep rates low. However, when rates do move higher financials will benefit, while telecom and utility stocks will likely decline.
The conversation shifted to Cuba on Wednesday's news of normalized relations with the U.S. Investors expect this could eventually bring some promising investment opportunities, especially for airlines and cruise ship operators, Najarian said. Those in the U.S. who have family in Cuba will likely want to transfer funds to them, benefiting such companies as eBay (EBAY) via PayPal, Western Union (WU) , MoneyGram International (MGI) and Global Payments (GPN) .
Cruise lines could also benefit, but aren't likely to see a "huge" incremental boost to earnings as a result. However, Link's top pick in the space is Carnival Corp. (CCL) because it should also benefit from lower oil prices.
It's time to buy Amazon (AMZN) , said Piper Jaffray's managing director and senior research analyst Gene Munster. He has an overweight rating on the stock with a $400 price target.
Amazon has great long-term growth and potential for margin expansion, but shares have fallen out of favor among investors. "It looks darkest before dawn," he said, as investors continue to worry about near-term margins. Operating margins should climb from 1.3% to 2.7% in 2015, Munster said, and climb to 6% in 2016. With just a few tweaks, the company could expand margins and drive profits higher.
"I like the call," Link said. While she finds the risk-to-reward attractive for Amazon, margin expansion may not come into play until the second half of 2015. If shares of Amazon break below $280 per share, it's "dead," Brown said.
-- Written by Bret Kenwell