Transcripts For CNBC Fast Money 20161010

Names in the group about to break out. But first, we start off with the move in oil past 50 bucks a barrel today, settling at its highest level in more than a year. Its actually whats been rallying that piqued our interest. Over the last month, the dollar higher, things that dont rally when oil does. Is the economy perhaps stronger than we think . Guy . It would appear so. If you ticked all those things you mentioned, you have to say, were looking at a stronger economy. I dont think were looking at a stronger economy. The numbers continue to come out, the ism data and what have you is mediocre at best. What i think is going on is this mad rush out of bond markets overseas, which is now formulated, manifesting itself here in the united states. And its giving people the illusion somehow our economy is better. I dont think thats the case. But it doesnt matter, because the market is interpreting that way and the stocks are moving to the up side. Tim is talking about oil, hes been right. But as long as oil just stays at these levels, some of these highly levered plays continue to do well. I agree with guy. I the economy isnt the strongest the oil run would suggest. I think this oil run is very much predicated on the potential for a deal. Some cutbacks, even with that having been said, were in a nice spot for the consumer so Retail Stocks should be doing nicely. Travel should be doing nicely. Weve got people very much employed, and even with the oil, you have relatively low gas rates here. So i think its not a bad time to be in Retail Stocks. I dont think theyre expensive. But i dont think that the move lower in oil was indicative of the economy that People Associated with. I think were getting something back. Price is truth, price is not truth. Oil, when its a supplydriven story when, in fact, demand all along to me was up, you know, 1. 3, 1. 4 Million Barrels a year, 1. 5 , its never been about the Global Economy falling apart. So the fact that the dollar is slightly stronger, i think, is very good. Emerging markets shouldnt be rally if the dollar is stronger on a flight to quality. The dollar is stronger because were humming along and the fed has enough back drop to raise rates. The dollar is still very much cap. Very good for oil. Airlines get pricing power. Airlines trade on perceived pricing, not necessarily eps. If you look at the airline sector, their eps has gone up. The big run for airlines, eps never grew. So i think airlines can continue to go higher. I think a couple things. So the data two ism numbers that came out, theyre actually positive. And they were not only positive burks new orders are positive. Thats a good thing, bullish for the economy. We have retail sales coming out on friday. Industrial production coming out monday. If retail sales follow through, the Retail Sector remember, in april, they were knocked off a cliff. They were beaten down. Its the rebound trade right now. And i think thats got a little legs to it. If it tails, then youre going to see another cascading lower. The most impressive thing is what tim just finished off on, the dollar, where you led off the spot. The dollar and crude, both rallying is troublesome. Crude will turn around. This is resistance. So youre saying that crude is tapped out here. Yep. And the reason is because of the charts tell you that . No. Why how many times has opec sat up and failed. How many times have they actually set up and it went higher ralliralliyed. Is it opec or dollar rise . Opec. The fact that the dollar is rising with crude is that opec is the reason why crude is rallied. Its an artificial rally but think about why opec, who has always disappointed you, actually could not disappoint this time. They have to get the price up. You have slumbchlumberger ceo o running around london, talking about how Civil Servant salaries in saudi arabia are down. Theres a lot of social pressure on them. Iran has gotten their production up. Russia has got 11. 1, alltime record. Why wouldnt they cut a deal . Its pretty much everybody ill push back and say this is why they will fill. Iran just ramped back up. They just had sanctions removed. They are not going to cut any production. But they will be free. Libya back online. Look. All those things are bullish are bearish, ultimately for an opec failure. And our do you know the hedges are coming out, 55 a barrel . I think theyre already out there. Oil going to 80 bucks. You tell me based upon where Global Demand is i dont think its going . 62. 50, probably the level theres a lot of dollars i say 55, you say 62, were just arguing over a couple dollars. Were talking about ten bucks in the price of oil, whatever blend youre following, a significant impact. 55, goes back to 45. There is your 10. The risk reward for oil, moving from 40 bucks to this level is to the down side. Both of you, the bottom loin, you dont think oil is an cater to ter on health on the economy. The past month is not the economy getting stronger. I think the economy is doing fine, the same it was all along. Yes, i kind of agree with you. But i cant not say that people were totally wrong about the economy when oil is down at 25 bucks. So you have to give the economy some credit for this move in oil. Yeah, i mean, the other you layer in the move in technology over the past month, the move in small caps over the past month. All very strong. The small cap i think it closed at 125. You get that above 130, which was basically the tunnel top we made a couple years ago and earlier this year, then youre on to something. Then you put the s p in a different trading range. The other side of what you just mentioned and not to throw cold water, but some of these industrial names, dover today, honeywell last week, tell a different story. Which might be fine. Could be changing, very well could be the change where the companies started going the way of the dinosaur and new companies are emerging. Without question, that would be going on. But you have to look at those names and say maybe there is something going on on the surface. Real quick, the levered energy plays, in my opinion, talked about it for a while, still work. Dennis gartman, editor of the gartman letter. Great to have you with us today. Russia president putin who basically said, yeah, were going to support a limit on production. Do you think that this will actually hold . No, really, i dont. And im with timmy on this. History shows you that the saudi and the iranians can never agree on anything. Whoa actually thats grasso. Grasso, im sorry. Something we agree with. Timmy, i love you, but im with grasso on this one. Im sorry. What happened . If history teaches us anything, opec cheats. They always simply do that. Of they have every reason to have to continue to cheat. And the iranians and saudis look upon each other across the persian gulf, one the head of the sunni nation, one the head of the shia group. They hate each other, have for decades. Theyre going to continue to produce, continue to fight each other for market share. And at these levels, anything above 50, 51, with a 4 contango for the one year, 55 for the one year out, frackers in the bakken, frackers down in the eagle ford, frackers in the permian will continue to produce. If they havent been producing aggressively now, they shall. Theres going to be a substantive amount of crude oil coming into the market. I suspect that we can take some of that off. I suspect the Global Economy is doing okay. But at these numbers, there is going to be so much more crude being found and produced and hedged that anything above 55, i think, will be very, very difficult to attain. Dennis, its karen. Let me ask you something. There is almost a day for day tracking of trumps sort of disastrous run the last three weeks, and oil has moved. Literally almost to the day. What do you make of that as relevant, not relevant to this oil move . Karen, i think there is a greater relationship between trump and the mexican pesos. Trump and the russian ruble. Trump and actually the chinese recommend and b. Trump and crude oil is something that is asynchro thousand and lucky fortuitous and not something im going to watch for the foreseeable future. Others may. I dont see any correlation there at all. Its just something thats happened in the past week or two. Last quick question, dennis. So of the run in oil we have seen over the past month, what comes out . We first get when we get the first indications that the production limits wont hold . Whats in the price now . Is it the full onemonth move . Oh, i think i think any discussion of a decline in production or at least a freeze, anything less than 32. 5 Million Barrels of crude per day from opec is already in the market. They have to take it in order to continue to sustain a price move. Theyve got to take production down to 31. 5 Million Barrels per day. Thats just not going to happen. The iranians are going to continue to produce and increase production. Libya is coming back on stream. The frackers are always going to be there. The russians may argue and say theyre going to continue. Theyll curtail production from under 11 Million Barrels. They wont do it and the saudis will continuously produce as much as they possibly can. They will not allow iran to steal market share from them. Cant happen. Dennis, good to see you. Thank you. Thanks for having me. Dennis gartman of thegartman letter. Lets say youre right. Does that mean guy is wrong . If they all ran on this opec, the hope of cutting production actually, cutting production, they all have to come back in and come in by the same equal amount they ran up. What would you be buying here . Right is being long oil for a long time. The oih are the most levered names, most relied on, more drilling. And, again, i would argue that opec does not have this bear capacity that people think they do. Saudi has got a 13 fiscal defenda deficit. Go with the levered names, or especially the european names beaten by the weaker euro. With nice dip yields. Valuations are very interesting. Are you in oil right now, karen . No, not really. I guy had a right call with apc, with a really nice run since the secondary. I would actually be a little more afraid. I think the likelihood of a deal falling apart is enough to make those levered ones very risky. Do you want to risk that the question is enter earnings for a name like anadarko which reports on halloween to 31st. Do you want to risk not being in this name or being short this name in the Earnings Release . And i think the answer is no. When you look at apc which bounced off the level where they priced that secondary, i think there is room on the up side. Each day gets more difficult. But this stock which closes 64. 5, in my opinion, on a benign oil tape could trade by the low 70s. What could be twitters weekend ever isnt helping the stock. And woes could be a mistake. Tesla ceo elon musk hinting at new and unexpected products. So what could he be talking about . Weve got the details. And later, Samsungs Galaxy note being removed from the shelves with problems with its exploding battery continuing. Much more fast still ahead. Than a table for 60. Ml wednesdays are the new thursdays or the mandatory after party. How early is too early to leave . Youre not going anywhere. Im not going anywhere. Its your tv, take it with you. Watch all your live channels, on your devices, data free. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Tweeting happens to be a modern day form of communication. I mean, you can like it or not like it. I have between facebook and twitter, i have almost 25 million people. Its a very effective way of communication. So you can put it down, but it is a very effective form of communication. Im not unproud of it, to be honest with you. That, of course, is donald trump talking about twitter during last nights debate. Actually, show of hands. Who is on twitter while you were watching the debate . Oh, come on. Sure. Where else would i be . But youre watching the reaction, right . Yes. Well, twitter it could have been a huge night, right, for twitter. Twitter might have been the only true winner in last nights debate. The social Media Company said 17 million tweets were sent out during the town hall and on friday people blocked to twitter after the leaking of the donald trump tape. But none of that hype seemed to help the stock. Obviously, its got other woes, like all the bidders running away from twitter. But this could have been a good thing for twitter. Lets hope hes not tweeting from the locker room. Lets be clear about that. You get down to a place where you think about the stock. What ive always felt as a shareholder who didnt dump it in the face of takeover rumors that there is intrinsic value, this is a Media Company that has an unbelievable brand and something that has to be monetized. Even if their Customer Base isnt growing as fast, maybe its shrinking. So i think you get at a place where these guys need to work on the earnings profile, but where should the stock be trading . I think its getting to a place where its very oversold. In fact, time to maybe start nibbling, because this isnt about a takeover story. Yeah karen. Okay, the stock before the takeover news came was about 18ish, right . I think it is newsy if they had google and disney and salesforce look and say no thank you. I think that should make it go back to well below 18. Now i dont know the process is over yet. I dont know. Maybe somebody throws in a bid. I dont think 18 is the floor. Is there a report out of reuters saying that crm might actually lob a low ball offer to twitter. Thats actually where we were as a desk last week when we talked about crm. We had thought maybe this is a poker game that benioff is playing, trying to either spook people away, or come in and grab this could be really crazy, if it worked out perfectly for him. But i do believe there is still a bid there. I do believe they have to monetize. Im still long, as a shareholder. And i believe theres some up side still there. The woes of twitter could be illustrating a classic investor mistake. Buying the stock of a company with a universally loved product, maybe one you use. Twitter is down 25 this year, but it has unofficial category, check out shares of gopro. Thats down 12 , even though people love those action cameras. Starbucks down 11 this year, even though there is one on every corner and even though people love their burgers, shake shack down 16 . So could that old adage of buy what you know actually be dangerous . Guy . Its interesting. Obviously, we cherry picked a little bit. So with those four stocks t does look dangerous. Were talking about peter lynch and buy what you know. I look at it this way. If i were to go to a mall and walk past an Abercrombie Fitch and i see 06 off, im saying there is some difficulties there. Maybe zumayaees . Zumiez, perhaps, and where did you used to go . King. Not publicly traded. Making a comeback. Another good exactly is radioshack. That was a big name, but then you saw Stores Starting to away. So to me, buy what you know doesnt necessarily mean buy the stock. It means understand how these companies are doing. And either buy what you know or dont buy what you know. So i still think its important, when you go out, i tell my kids all of the time Pay Attention to whats going on in stores. Totally changed. Back then, people bought the brands that they know. There were bigger brands, more monopolistic. We have so many niche firms now, the whole concept could be challenged. When you have a gopro im not sure you could overlay it. So many moving parts, analysis has become more extreme. Buy what you know is dangerous. Ultimately, youre not looking at valuation, just saying, this is a company that seems to be executing. Everything has got a price. And when you get down to it, this is the problem with starbucks, executing internationally, growing, growing, their product lines. Multiple retail channels. It gets to a place whats starbucks worth and can they grow in the 20s, 20 to 25 , which is what the multiple is pretty much saying it had to. I think starbucks has pulled back. Ive ridden it up and down, traded it around. But its a stock that is executing but not just because i like it. Still ahead, elon musk sending the stock higher with just a few words. What he said on twitter thats got investors so excited. Thats next. Im melissa lee, youre watching fast money on cnbc, first in business worldwide. Houston, we have a problem. Pretty much sums up whats going on with samsung. And what the ceo of verizon said over the galaxy note 7. Plus, you wont believe which tech darling traders think could be on its way to becoming the next twitter. No yes. And well tell you the name. When fast money returns. Cdw brought i. T. Orchestration to growing businesses across the city, increasing productivity like never before, which is amazing, unless youre a barista. 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Creating new ways to engage at every imaginable touchpoint. Its a new day in retail, and together, were building the store of the future. Digital works for retail. Lets talk about how digital works for your business. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to fast money. Tesla shares rising 2 today after ceo elon musk announced the company will not have to raise funds for its solarcity acquisition or fund its battery factory. Phil lebeau is in chicago with more. At least not in this quarter or next quarter. Right. At some point, most people who looked at their balance sheet, melissa, said they have to raise capital at some point, given how many expenditures they have in the next yearandahalf. Again, the reason these stocks or this stock, i should say, tesla, moved higher today is because everybody said, hey, this is great. Were not going to see any dilution in terms of the shares coming up this year. And as a result, it pushed the stock higher. But take a look at the cash crunch that tesla could be facing as you go into the remainder of this year. Now what we have the most up to date numbers in terms of liquidity at the end of the Second Quarter, 3. 25 billion. You see the other Capital Outlays theyre going to have coming up through the remainder of the year. Huge Capital Expenditure of 1. 75 billion as they ramp up production. That means the cash cushion should be around 400 million by the end of this year. And among those upcoming expenses that you have to keep in mind when youre looking at tesla, the model 3 rampup in production, thats especially picking up steam in the second half of last year, at least if they stay on schedule and having a huge rampup in production as they move towards 500,000 as the delivery target in 2018. And then youve got the gig afactory. Yes, they are already producing some battery packs, but if youve been out there, guys, and ive been out there, this is a huge project. Theyre nowhere close to finished. Theyre going tore more Capital Expenditures coming there, and thats where the earnings that tesla comes out with on october 26th, a lot of people will be focused on, a. , are they cash flowpositive, because if they are, it may be the last quarter they are as they go into what is likely to be several quarters of huge Capital Outlays, and thats why a lot of people are saying, okay, maybe not in the fourth quarter. Maybe not in the First Quarter. But at some point, theyre likely going to have to raise capital. All right. Phil, thank you. Phil lebeau in chicago on the tesla story. We were talking to an analyst on power lunch today, and he said q 2 next year would be pushing it. They could hold out, but it would really be sort of cutting it close at this point. They clearly have to raise capital. Just do the math. Whether its First Quarter next year, Second Quarter next year, its coming down the pike. The question is, how do you trade the stock in the meantime . And im not a pretender. We have had this thing called. Clearly i havent. But they cant break it. Who is they . The 32 Short Interest that would think the stock would be trading outside of 150 right now and its not. So i think against 180, stay long the stock. I still dont know who the incremental seller of the shares is to get it down there. And i think it could surprise earnings on the 26th. Thats one of the catalysts that would concern me. One of the big institutions throws her hands up and says im out. And they may not be public about it. Oft often when you have a fidelity or capital cut service at this point after the solarcity deal was announced so long ago and the vote is coming up on the 28th . At some point, people are going to get kind of frustrated with the lack of delivery and cash burn and the whole model getting pushed out into the future. And competition is heating up to a place where i dont care what these guys do at some point. They can never be worth this multiple, even if theyre buy themselves time by hitting the last delivery numbers . Clearly, its the stock showing that, but well below where it came from. I dont think so. Just real quickly. Im surprised they wouldnt could do it in strength. Maybe they can do a better job selling equity or something later. Still ahead, samsungs phone nightmare continues as the Company Halts production of the galaxy note 7. Will it have customers fleeing for good . Weve got a special fast money report next. And as we head to break, check out shares of alumina, a 27 billion market cap company. Well tell you what took it down and give three biotech stocks that a top technician says should be bought now. That after the break. Running, anywhere in the planet. Wherever theres a phone, youve got a bank, and we could never do that before. The cloud gave us a single platform to reach across our entire organization. It helps us communicate better. We use the microsoft clouds advanced analytics tools to track down cybercriminals. This cloud helps transform business. This is the microsoft cloud. Welcome back to fast money. Stocks rallying across the board today, although closing near session lows. The nasdaq 100, hitting a new r intraday high. Check out shares oflum that, falling more than 20 . The headlines moving the stock and give you three biotech stocks that may have bottomed. Plus, could one of wall street in americas most beloved stocks be facing the same fate as twitter . Well tell you the name and what has investors so nervous. First we start off with mounting problems for samsung, replachts of the galaxy note 7, proving to be just as unsafe as the original. This is major wireless carriers halt sales of the smartphone. Josh lipton in San Francisco with the very latest on this. Josh. Well, thats right, melissa. Samsung reportedly now suspending its production of the note 7 following headlines that the replacement models are also overheating. And carriers are responding. At t and tmobile say they wont issue the note 7, and this afternoon, verizons ceo also weighed in. This is by far the biggest concern ive seen in cell phones during my tenure. And i think theyre a little surprised that the fix didnt fix things. So its a major black eye for them. But at the end of the day, theyll recover. For its part, samsung saying in a statement, we recognize that carrier partners have stopped sales and exchanges of the galaxy note 7 in response to reports of heat damage issues, and we respect their decision. When questioned for investors, what do note 7 customers do next . Do they stick with samsung and the s7 or s7 edge or do they buy other Android Devices like lgs v20 or the pixel phone . Credit suisse thinks some will move to apple, adding 5 to the eps. Today samsung stock did slip about 2 , but its still near an alltime high. Samsung offered a better than expected preview of q3 results last week. And analysts say the companys other divisions, so semis and display, do still appear strong. Open question is just how long this note 7 story continues. What kind of longterm impact that is going to have on the companys brand and financials. Guys, back to you. All right, thanks so much, josh lipton. Worth noting also apple shares hit a december of the highest level since december. I think its a direct reflection of whats going on with samsung. Apple is still an iphone company, dependent on iphone for their bottom, top and sideways lines. For them, the net recipient of any positive flow. Samsung, tim said last week, theyre a conglomerate. Less of a negative for them as it is a positive for apple. I agree with the samsung part. You have to. I just quoted you. You want to disagree with yourself oh the fact that how about the fact the iphone 7 demand is off the charts . How about the fact the valuation for this company didnt price in this . No way. Yes, thats there too charted from the first headline of samsungs phones, and you cant argue with the chart. Youre talking about something else. Yes, its a positive. Iphone 7 is a positive. But when you look at samsungs troubles, its that is what there is a lot of other when apple is concerned with iphone 7 its a zero sum game. Particularly in the android market, for people who love android, a particularly fragmented market. So many phones out there that are android phones. I thought the chinese manufacturers were ones that were really going to be eating apples lunch, especially where apple wants to grow. I think apple got to a place where the expectations going into this release were so low, going into the best quarter this company has. Why shouldnt you be long the stock . Thats underperforming the etf for technology. Its up 12 . Ill tell you what the youre saying that if it was such a great deal, that the iphone 7 was so good in sales coming up, they should be outperforming. Its underperforming its own etf. Number one holding. I actually think im not im not long apple. I think it is a decent opportunity. Not just this sale, but future sales. Thats a good thing for apple. For those users that are gone. That dont return. Incrementally. Yes. Its incremental sales. Near its alltime highs. Apple in a fiscal first, their best of the year. So i love to know what the people on the street are thinking. Sure you do. Times square. Right behind us. Really . The world is our oyster out there. You know what i did . What . I said im going to go outside, get a camera crew and find out what people have to say out there in times square about this exact issue. Youve heard about the samsung phones catching fire. Does that scare you . Yeah, it does rather. Yes, its horrible. Im team iphone, i would never go back to droid. Yes, it does. Thats why i stick with apple. Yes, i have my own samsung since three years, and im very happy about it. Can samsung do anything to win your business . Well, for one, to make their phone stop catching on fire. No, because i dont it any more. Ive got the iphone. Dont do the samsung thing, because you dont want to catch on fire. No, not at all. Its too dangerous. I dont want to risk my life. Samsung has always been giving us the best for so long. But i think something should be done about it. Ive had an iphone for years. I wouldnt change, probably. Not until were sure the problem has been rectified. Okay. What do you say . I dont understand. So i brought in a translator here. I dont understand also. The trans i need a translater for the translater. Did she not understand your english . My american is perfectly good, mel. No, she didnt speak english that well. Oh, okay. So i asked her friend, can you translate . And she said, of course, i can translate. Then i brought her over she couldnt translate. Are you sure she said, of course i can translate . So what did this all tell you . It told me that apple owners are extraordinarily loyal to their product. And samsung owners are a little bit concerned. The most some of the things we didnt talk about or didnt get on air, when you get on a plane nowadays, one of the first things they say, if you own a samsung device get off. Please power down. Thats concerning. What about with your flip phone . They werent thought they said, where did you get that, adam . We had fun out there in times square. Cracker jack crew we have. Of course we do. All right. Still ahead. Shares of alumina crashing in the after hours, that is a 27 or was, a 27 billion company. Well bring you all of the details, give you three biotech stocks and one top technician says are actually ready to be bought right now. Plus, financial surging today ahead of Big Bank Earnings later this week. Some are betting the rally will be shortlived. Well explain. Much more fast money right after this break. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Tell me, how do you like to learn . Songs are my favorite ooh elmo likes songs puzzles me love puzzles. Well. Puzzles are a great memorization too dinosaurs yess puppies ooh i love puppies so do, i. Actually. Pets can teach important lessons abou dancing elmo loves to dance. Okay then, lets dance. everybody cheers yeah baby welcome back to fast money. A news alert on alumina, crashing in the after hours session. Lets get to meg tirrell. Meg. Hey, melissa. Lumina saying its Third Quarter sales coming in short of expectations. About 607 million for the Third Quarter. Lower than its guidance of 625 million or 630 million. Attributing this to a larger than expected year over year decline in sequencing instruments. Alumina the largest in sequencing instruments. If you look back to april, this is the not first time they have warned like in this year. An identical drop in april after they warned sales would fall short then. The stocks falling back down to those levels. Alumina not alone. If you check out they wero fisher and specific biosciences with much smaller share. Theyre also down in the after hours. What is also down, the ibb. Although pneumonlumina is the m machines, taking the whole sector down. Probably not quite a good day tomorrow as we saw today for biotech. Meg, thank you. Meg tirrell joining us from the nysc. So its interesting, others deion the back of the news. Lets talk about apneumonlum. Go back to january, it took longer but the stock went from 190 to 140 over the course of a month and a half or so. So growth was supposed to be about 14. 5 , came in around 10 . When you trade close to 50 times forward earnings, this is what happens. Especially with the stock thats been on a bit of a run. If it holds 140, and that is a huge if, and im not suggesting you go out and do this tomorrow. But 140 was the line in the sand in the beginning of january. It was the line in the sand again in april. Holds 140 for a couple days, worth a look on a long right at that line right now. All right. While pneumonia that is s k sinking three other buy owe tech stocks our next guest says should be bought. Were at the smart board with the names. This is really a fantastic segue with the lumina story. Health care is the worstperforming sector of the major s p sectors yeartodate. Flat versus roughly 6 for the s p itself. Within that sector, we have med tech stocks like pneumonlumina strongest part of health care. Biotech being the weakest part. People want to know, when do i sell med tech and start to buy the biotech. We might be at one of those water shed type moments. Clearly already started to sell. Now to the biotech component, three stocks could benefit. First stock, bio marin. We have been making these higher lows all year. Nice up trend. This is the 100day moving average. A nice triangle that formed here or coil, i think the next move out of the coil is to the up side. So heres stock one. Now we see insight. Once again, these are stocks that are forming a big base of support here. You have the 50 crossing over the 150. And the stock actually punches out to a new high here. Even though biotech still sort of struggling along. So we like that bullish breakout. Keep an eye here. Look at this Double Bottom here. I want you to remember that Double Bottom and heres why. Horizon. This is our last stock here. Remember that Double Bottom . We have one right here. Except the stock has yet to break out. In fact, you have a 28 pullback after the breakout here. I think history repeats itself and we can work higher off the Double Bottom. The med tech into biotech might be beginning right before your eyes and these are three great ways to play that rotation. Should we invite rich over . Of course. Not, of course. One time we didnt invite him over, remember . Come on, rich ross. Come on over. Ashley, bring him a chair, please. Why walk when you have a personal good canoe . All right. Heres my question, rich for all of these names, what happens if just the overall mylan gets a bad headline, ibb turns lower. Are these highly correlated to that etf . Yeah, look. We know this space has been really newsdriven all year. We have the prospect of a potential clinton presidency, which is really weighed on the share. Its not a surprise in hindsight that health care especially with the problems we have seen across specialty phrma. I think you know what youre getting when you buy a biotech stock. The risk is commensurate with the reward. Once again, not putting the quote, unquote, 401 k into the whole thing. I think the reward is commensurate with that risk. When you talk about it, how binary the risk is, right . So when you look at the ibb, you know your charts better than anybody. I look it at the 50day at 290, the 100day at 279. Every dip around that level on the 100day has been bought and every rally into that resistance level has been sold. Isnt it better to just play for 11 in the ibb instead of worrying about the granularity of a lot of the bio names . I dont have a problem playing the etfs coming from a guy who does research on individual companies. Thats a safer way to play it. Once again, if you want to get the bang for your buck, the individual companies are going to be the way to play it. But obviously, then you bring in that prospect of the companys specific risk, which could take you meaningfully lower like we saw in the after hours trading in the med tech stocks. Did you like guys assessment of the aluminum line in the sand at 140 . Of course he did. You dont even have to ask him. You dont have so sugar coat this at all. Im going to leave lumina up to guy. Well break that down next time. Hes a gentleman, rich ross. Thank you, rich. Thank you. Thanks for having me. Rich ross, making it to the desk this time. Boy, hes missed it before . Yes. Were you not here . We kind of had to say give him a heisman. For two of the names, they were it interested interesting, they have been cited as takeout candidates repeatedly. If you look at insight, that broke down from 120 at the beginning of the year and now seemingly crawling back to the levels it broke down from. Huge valuation. If you buy on the valuation, you buy for the wrong reason. They report at the end of the month, a bunch of analysts made comments about insight specifically off some results they just recently got. So this is another stock if you can deal with the valuation, could rally into the levels that rich talked about in the he thinks at the end of the month. Another name that moves with the likes of a mellen. Right, into maybe theyre sold enough here. I just think, you know not for me. And i was just going to highlight gilead. Remember fast fires on the show . Oh, yeah. Gilead to me is a name ive thought for the last ten bucks was time to sneak around. We know theyre hcv fastfiring basically. A throwback fast fire. An agency huh oversees us. Part of the problem, people think they need to buy something and also a concern for the stock. Coming up, one of wall streets favorite stocks could be in hot water. Why some are comparing it to twitter. Citi and wells fargo. Which to trade and which to fade. Youre watching fast money, on cnbc, first in business worldwide. [pony neighing] what . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Doesnt go on your wrist. Technology. The highly advanced audi a4, with classleading horsepower. gasping are you all right . I was in a room full of light. You were there. You were financially secure it was glorious. How do you know that . I work at ally its my job to know about finances. What else did you see . Did i have a speedboat or anything . Toss me back in, ill check. Hes finding out if i have a speedboat nothing stops us from doing right by our customers. Ally. Do it right. Negative on the speedboat. Ally. Do it right. Ive got 9 days left before retirement. Weve been planning for this for a long time and well keep evolving things. So dont worry. Knowing you is how edward jones makes sense of investing. Welcome back to fast money. Time for our call of the day. Netflix shares falling more than 1 after Deutsche Bank initiated a sell rating and a 90 price target on the streaming giant. The firm setting low expectations for a netflix takeover, the stock down more than 9 this year. The question here is, with rising competition, rising content costs, is a buyout the only reason to own netflix shares. If thats the case, could it have more in common with twitter than some would care to admit . Grasso . I think the bullish story on valuation was the was obviously domestic growth and then turned into an International Growth play. And now content internationally seems like its going to be a much tougher road to hoe. The problem is, what happens if they do get bought out . This stock extremes higher. I know its not a reason to buy a stock. But i do believe there are those resume there are rumors, right . Nothing thats been confirmed. I do believe that youre going to see some consolidation. I do believe i know its a steep price to play, but i do believe someone reaches for netflix. Somebody makes a bid. Yeah. I dont see why you have to go out and buy this company, especially when i think the competition is getting significant. Whereas i think twitter as a franchise thats defendable. I dont think netflix is moat, something you can stand by and say. Meanwhile, at 300 times earnings, why can there be a huge premium on this . I dont see it. And, again, the saturation in north america, the International Business that steve is talking about is not really growing. There are cultural issues to that. So i dont i dont see them as the same. Im long twitter, not long netflix. If anything, ive been very negative on netflix. I think you cant own it for a deal here. I mean, for one thing, this is a very large property. Big deal. There is not a giant universe. There are many who could do it. Its a very big deal to do. If i were ceo of netflix, i dont everything has been going right for them for a long time. Maybe he would see this as the end in terms of competition. But i dont think theyre in that mind set. If youre really to play the chess pieces out. Lets say i love playing chess. Youre probably very good at it. Actually, im not very good at chess. Anyway lets say its disney. Can we just get back on track here . I am on track. Disney buys twitter, he could position himself to be the next ceo of disney. I think that if he buys twitter . No, no, netflix. Disney buys netflix. That was a new wrinkle there. Completely different story. Listen, i think disney for netflix anywhere to 65 billion. Does disney want to make that kind of a leap, that kind of a risk . Im not certain disney is the right play. Ill say this about the International Growth. Reed hastings came out and said things arent going well in china and mentioned this cautionary tale f. Youre looking for china for netflix, look someplace else. Valuation is crazy, but karen mentioned it. With exception of a couple times, they have done everything right now for the last five or six years. So i still give reed hate attention the benefit of the doubt. Now to the financials. Traders are betting on trouble for one name in particular. Mike coe from austin. Its interesting. The bank stocks are not implying above average moves. Wells fargo the name were looking at usually moves 3. 5 on earnings. And only applying 2 . What that means is options are very cheap. And we saw somebody in there buying a lot of them. Two times the average daily put volume and what they were buying with the november 40 puts, 20 cents approximately for 30,000 of those. So thats not a bet on 2 move or 3. 5 move but possibly a 13 move. To the down side by november expiration 39 days away. That was the activity we were seeing there. I think right now options are the way to play the banks. Very cheap in those names. Anybody interested in wells fargo at this point . Well, personally, i still think this tremendous headline risk associated with listen, you can make a case actually, its hard to make a case in valuation, because it has traded at premium valuation for a while. Maybe you can make the case. The name breaking out is bank of america. And 16. 30. I think what people are missing, the Third Quarter Capital Markets for a lost of these guys could be a lot better. Record volumes of equity underwriting and debt underwriting and september alone. So therefore, i think there could be some surprise to the upside yield curve getting steeper. Mike, final word . Yeah, i jut think the way to play it right now, bank of america is the one i like best and would be buying calls because theyre very inexpensive. Thanks, mike. For more options action, check out the full show. Very sharp. Next, final trade. Stay tuned. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley back for final trade. Tim. Gold now starting to look interesting. 200. Bar rick, 1550. Karen finerman. A very calculated, i know exactly what im going to trade. Deutsche bank calls. I think they have to address the situation in very short order. So ive got november strike calls. Look at 15s for example, 16. And i think theyre going to do something. And if nothing happens, i think its going to acreate higher as its done for the last week. Steve grasso. It was a trade, xlu and now oversold on an rsi, relative strength index. Time for the trade to bounce back. Give it a couple days, but youre a buyer of xlu. Are you looking at southern . Etf. Okay. Just mute your risk. Rich ross. Isnt it nice we had him here . And he brought his daughter. Yeah. On a canoe. Is that what he did . I heard. Intrexanon. Xon goes buyer. Im melissa lee. Thank you for watching. Dont go mad money with jim cramer starts right now. My mission is simple, to make you money. Im here to level the Playing Field for all investors. Theres always a bull market somewhere, and i promise to help you find it. Mad money starts now. Hey, im cramer. Welcome to mad money. Welcome to cramerica. Other people want to make friends. Im just trying to make you some money. My job is not just to entertain but to educate and teach you. So call me at 1800743cnbc or le course tweet me jim cramer. Tonight im letting you in on something big, the meth oltd of