> will the red hot july lead to an even hotter august? let's find out from the best players on the street. this is "fast money." live from the nasdaq market site. i'm melissa lee, and these, of course, are the "fast money" all-stars today. the s&p 500 rising for a fifth straight month, gaining % in july. but is a rally really ready for a vacation at this point? let's get the word on the street right now. in terms of the fundamentals of the rally today, that continues the rally for the month. did we see that participation that we like to see on a friday during the summer? >> not exactly -- >> we're all excited that you're back. >> my goodness, i'm excited to be back. >> that's a good color on you. i'm not that excited. month end i thought you would see a lot of money being put to work. it looked like earlier it was fades out. i'm not that constructive. the s&p rallied over 100 points

in 2 1/2 weeks. it's too much. i don't care what anybody says. >> today's rally was different from yesterday. it faded a little bit. i sat here yesterday and told you it was allocation and there were people that were marking up and people positioned for next week. i would not want to be short going into next week. i'm worried about august when liquidity will dry up, but we're also getting more data. the data on gdp, forget that. but we started to get support from the chicago ism numbers, told you about the decent supplies out there. >> when you go down to the gdp numbers, consumer spending was a concern. we'll get the raft of retail earnings over the next couple of weeks and it will shed more concern and light on the strength of the consumer. >> it has been a phenomenal four months. you know how optimistic and bullish i have been. but guy is spot on this. you talked about yesterday, you look at the intraday price action and that is what we were looking at to see when it is you move to the sidelines. not get short, folks, when you move to the sidelines. when you have stocks that go to

the ten-month high and meet all that supply and inventory that remains from the pre-lehman days, all that selling and reverse and go out on the lows, that's the telltale sign you move to the sidelines. and what's coming this week? keep in mind, friday, unemployment. that's a huge roadblock for the market. >> welcome. in terms of the volatility, we did see it go up a little bit. what do you make of the action? what do you see in terms of protection buying perhaps going into next week? >> well, you know, i would agree first with tim and joe. i mean, one of the things that we keep hearing about, a lot of people are saying we're due for a pullback but i don't see the smart money guys getting short. so, i think that's a critical thing to remember. when i was taking a look at volatility, i noticed the vix was relatively static when the market was rallying a lot. you would expect to see that come in. but i would say, in a longer term bullish look, the vix, we're looking at options trading in october, we saw a large play there that was actually a little bit suggesting volume is going

to stay static right here. i don't think there's a disaster on the horizon. >> joe talked about the payroll numbers. i think we'll get the auto numbers on monday. >> does that matter anymore at this point because it matter because of the cash for clunkers program? >> it absolutely matters. first of all, auto sales read into durables and lead to the commodities and people think they're a dollar trade. they are not. if get a 40% move up in auto production, i think we will, that's the beginning of the rally. china pmi announced today, everybody's following china's every word, and that was a big story this week. they'll tell you whether the economy continues to grow on the industrial side. >> but you have to look at what you do next week, heading into the unemployment, you got to move to the sidelines. a lot of these stocks. look at google today. we talk about stocks that rally and meet up with the pre-lehman highs, the ten-month highs from where the market fell back. a tremendous amount of supply sitting there. >> what does that mean if you want to move to the sidelines ahead of the jobs report? are you betting that perhaps

it's a number that will surprise us? isn't it a bad number that we are all expecting? >> what you are looking to do is be prudent in the marketplace, a market that has rallied substantially and potentially reloaded. it's okay to get back in after higher levels, after unemployment, the market will be better. >> but the rally is not every single stock. it's not like we've seen an entirely broad rally. you were alluding to tech. it's a large part of everything we've seen. if you step to the sidelines of tech, it's understandable to me. but there are some other areas in the marketplace, big cap names that haven't participated the way they typically do, like energy. if you're long energy in here, are you going to bail out? are you going to sit on the sidelines? i don't think that's so. >> just to finish my point on google, it closed on the lows today. that's significant. mastercard did the same thing yesterday, visa, those are the names, intraday price action rolled. >> the other side, the stock that hasn't participated in this rally, what is that telling you? there's a reason why it didn't participate. if you're waiting for it to play catch-up, i think you might get smoked. i take the other side on that. >> this is trading.

>> you need two sides. what do the history books say if you have a strong july, what does it mean in august? chart of the day. chart of the day. bring it up. because when we see a great july -- >> it's coming. it's coming. there it is. >> there we go. we usually see a pretty decent august, in fact, when july gains more than 5% the average august gain is about 2.4%, the average august through december gain is 4.5% according to history. >> they are somewhat meaningless. they are not your numbers, moses, so i'm not coming at you. people try to throw stats at the market that are totally irrelevant to this context. if you look at august, though, again, in the second half of august, you'll lose liquidity and a lot of people going into september and historically it's a dangerous month. >> according to your logic, we have throw it out, too. >> most people think october is the month to watch out for, because notable crashes have happened. >> but if we're throwing out history, we'll throw it out across the board. maybe the week of september

won't happen either. >> you can certainly be consistent with that argument, yes. the latest gdp data pushing the dollar to the lowest level of the year against six major currency. gdp contracting in the second quarter but smaller than expected. fourth straight quarter with a contraction. consumer spending was a bit of a concern. and the dollar index collapsed into may. >> we had a conspiracy theory on the dollar index. timmy geithner sitting down with the chinese, monday and tuesday, what does that mean? the dollar will remain strong. a lot of people got turned on the commodity trade. you heard people get short oil, get short oil. and where is it today? oil reversed. commodities reversed. they are all moving higher. i do believe that it is related to the dollar specifically, because i don't think the fundamentals line up in the commodities. >> it's definitely related to the dollar. i don't think it's as contrived as the china story, but i believe we are on our best behavior. but i think absolutely the dollar is continuing, of course, because people are taking more risk. a gradual devaluation of the

dollar is happening. we talked about this on the show last night. the guest was right, but i didn't agree with the levels. we are seeing a transfer of wealth that is happening and it will continue to happen. right here this is risk taking. these are people going into higher yielding assets and selling dollars and buying brazil currency and buying indian rupels and russian rupees. >> we saw gold go higher. >> i messed oil up for you folks. when it was down four bucks, i thought it was a real tell. but what i missed gas was only down a nickel. yesterday it goes up four bucks, gas was up 13 cents. that's my bad. i should have picked up on it. i didn't. gas led this time. >> there is a clear tell going forward here as we move towards the end of the year. here's the trade. if we are going to have a gdp economic recovery, what should happen in the commodities space is the massive contango that all the commodities are trading under should be removed. all that inventory gets worked off, contango comes out of the market.

that will be the tell on the commodity space if we get the shift into backwardation. >> when you say that, do you think aluminum prices will be 40% higher? or oil prices will be 40% higher at the end of the year? clarify that. >> if contango comes out of the market, aluminum and oil will move higher from here. but without contango coming out, then none of the commodities will continue the upward momentum. >> the near data in the spot markets will rise. >> you want to look at inventory levels being worked off. gdp, that's what it's about. inventory working out, the same thing in commodities, it's the trade. >> in the equity side what is the trade? >> look at schlumberger, you would think it would rip higher and it was unchanged on the day. down from $59, traded at $53. sort of hovering. that might be a tell in terms of the equity. we sort of got in and out of this one.

i still think there's a chance that it trades down to $49. but to me it's dead money. >> chevron, exxon missed on earnings. mike? >> energy earnings are going to be down 50% to 70% year-on-year and understand they are late cycle in terms of recovering when you get the economic recovery energy is always last in terms of turning stock. >> you are at the primary factor in the integrated oil space that will drive this on the revenue and earnings was the price of oil and it was much lower. if you're taking a look at the forward price of oil, it's higher. you would anticipate that they are going to do better looking forward. so, i would personally say if you are looking at an opportunity, i would look at integrate before i would like in oil services or natural gas. everybody is looking at the natural gas and oil relationship -- >> unrelated. >> what are you doing? they flared gas at one time. they might start doing it again. >> i think if you look at the integrated, i think you are looking at the production growth. that's what people get excited

about with chevron and conoco, growing production. if we get rid of the contango, chevron would be the one to buy. when oil is scarce and it's going higher, they are growing the reserve. that's what they are rewarding. >> let's move on here to the next trade. this is the trade i've been waiting to announce. >> ooh. >> because i miss that expression. i wish you could have a split screen and run the animation and show on the other side guy's reaction to that. >> love it. it's great. >> cringing. cringing. >> the obama trade. >> the obama trade, of course, cash for clunkers program was still alive despite the $1 billion that congress appropriated for it, despite it drying up. the potential $2 billion injection. how will it help the automakers? ford shares were up 7%. >> this is the one we've called. >> absolutely. >> look at the stock action in ford. we've been talking about this thing since it was five bucks saying it would go to $7 and $7.50.

trading $8 now. it's way too late. bank of america put an $8.50 target on it. maybe it gets there. alan mulally said he will stay at ceo until they have sustained profitability. i love that. but you know what, this trade to me it's late. if you're getting in now you're playing stock market. but ford was the play and we talked about it. >> at the end of the day today, i sold short toyota motors. i think that has had a tremendous run but it's actually rising again to the levels. back to the pre-lehman levels where there's the tremendous amount of supply sitting overhead. and also keep in mind with the dollar coming off, you are going to see the japanese yen catch a bid, that will not bode well for toyota motors. it's a play i'm putting on. got short here, risking against $90. >> are we going to see the top of the automakers? because if we are stimulating all this demand right now and everybody's buying a car now to capture this rebate does that mean essentially they're not

going to buy a car later on. if you buy one, you won't buy one in december when it's over. >> we saw how quickly we possibly burned through this money. we had the ceo of hertz, they are making a lot of money, and we are betting on ford's subsidiary in turkey, growing 20%, 25% a quarter. i've been on board. volkswagen is selling an enormous amount of cars in brazil and china while the european shares are flat. there's more to the trade than the cash for clunkers trade. we burned down the inventories the last six months, we're tight. >> volkswagen is an international company, and the exposure to the united states given the side of vw is relatively small. i agree wholeheartedly. >> the names like autozone, we've all talked about it on the desk. autozone weak today. i guess the thinking is if you have a new car you're not going

to buy the parts to fix the old one up. >> the recovery in the automakers is probably the dismay of these autozones of the world, frankly. and the other trade we got you into and out of is look at the borgwarner, we told you to get out ahead. the stock was down 10% during that day. so, again, there's the stock that had a run. pulls back. yes it's a buy, it's not a buy here. >> what you are looking at is the fundamentals versus the valuations. the valuations are getting ahead of themselves. back in march, fundamentals versus valuation were way too cheap versus the fundamentals that the were place. it's getting rich. coming up next, we talk botox and earning. plus, move over bald eagle. another chrome-dome bird is taking over the annual kingdom. and why the cash for clunkers program is the best thing that happened to your hairline.

welcome back to "fast money." here's what we have got for you in the back half of the show. it's time for a street fight. should companies that receive government money be allowed to pay hefty bonuses? and we'll tell you what the options pit is doing as the jobs looms. and our final trade is your first for monday. but first, botox maker allergan is up 2% after beating second quarter earnings.

it's been on a great run, up more than 30%. can the investors expect the earnings injections to continue? joining us is allergan ceo david pyott. forgive the bad joke there. >> we like injections as long as they make people look good. >> want to ask you about this botox tax, the one that's being floated by the treasury adviser, gene sperling. an excise tax potentially on elective surgeries. how serious are you taking this talk? have you already dispatched your lobbyists to capitol hill? >> we've heard a lot of thins about botox taxes over the years. from what we understand, this recent initiative is already losing momentum. we heard chairman baucus that it hadn't been discussed for quite a long time. in fact, the history of this if we look at, say, state-level taxation in new jersey, when they instituted a cosmetic tax, it only brought in 25% of the anticipated revenues.

and, in fact, a member of the state assembly there has pointed out to many other colleagues in other states, basically i wouldn't do it again. >> david, you're not just botox, you're not just a pretty face either, my man. avuveil got fda approval. relieves the cataract surgery pain. is that a big deal for you? >> it's kind of a second-tier product. the indications you spoke about are absolutely correct. i think the more important recent approval was our drug for retinal therapeutics which, in fact, the largest -- well, the most rapidly growing segment of the world ophthalmology market. that's a big deal for us. of course, for your listeners and viewers, in fact, half the company at allergan is ophthalmic pharmaceuticals and we've been the fastest growing company in the world for seven years in a row now. everybody knows us for botox, but there's the other side of it as well. in fact, that's how we started.

the first two indications of botox were for ophthalmic uses. >> great to have you with us. thanks for joining us. now, let's get to the stocks that are making extreme moves for the week. time for "pops and drops." the weekly edition. a pop for alcoa. up 7% on the week. >> metals are on the move. aluminum's up 20% in the last week and it's going higher. >> nike popping 9%, joe. >> falling dollar. looks like nike's found a base around 50 bucks. we talked about getting long here. it looked like it broke out on wednesday. the trade is long above 50. if it goes lower, you're out. >> poot pop here for american super conductor, amsc, up 20%. >> cool name. but huge quarter. it wasn't that good. good enough, though, to squeeze out all the shorts.. if this gets below $30. be careful. it goes to $32 today. >> a drop for xom. it was down 3% on the week,

mike? >> i'm kind of surprised that people were surprised by the results. we know what the primary factors are in the integrated oil space. they should have seen it coming. no way it was a good quarter. so, now i actually think i'd start to take a look ahead. i might look getting long on the integrated. >> we have a pop for the bear-faced bullbull. that's not a new nickname for tim. a new species of bird has been discovered in the cliffs of laos. the songbird's moniker comes from its featherless face because they use it apparently to attract mates. >> apparently for birds, bald is beautiful. >> we are not well represented. >> if you hear about the bare-faced bulbul it's for you, baby. >> it needs a little botox. >> the pop for barclays. it was up. >> the bonds rallied on the gdp number. we have a big refunding announcement next week. next week is obviously a huge week. out two weeks. more auctions. >> nice pop for wells fargo on the week. it was up 5%. >> it was short covering.

i wouldn't get too excited about this one. nonperforming assets, we talked about it last week. 45% growth. that does not bode well going forward. >> drop for pfizer. down 3%. >> we got a positive piece in "barrons." eight times forward earnings, trades at a 55% discount. the problem with the argument it is the same argument for the last $15 with pfizer. stay away. >> big pop here for expedia. up 12%. mike? >> i like to see the consumer-type names doing well. mastercard was a little bit of a surprise, but i'm hoping the types of names and what we're seeing isn't just a little blip on the radar. >> and we got a pop here for adrienne's hair center. again, if only pete were here. whoa! no, no, no. we love pete. we love pete. you know if he were here, though, that toupee would be coming off his head. the ft. lauderdale, florida, hair salon has been inspired by the cash for clunkers auto stimulus plan and is offering its own cash for clunkers deal,

paying men and women $250 for trading in their old hairpieces for a new one. the hair weaves can run between $500 and $1,000. they say there are a lot of clunkers on people's heads, hence the program. black in a minute. >> i'm guy adami and this is your "fast money" trade school. be aware of the leveraged etf. debt gives them the ability to ramp their moves higher. double or triple. if you can stomach the swings go for it. but if you can't stick to the one to one funds. understanding your risk is paramount to winning in a bear market. class dismissed. ( chirp ) team three, boathouse? ( chirp ) oh yeah. his and hers. - ( crowd gasps ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion? - ( chirp ) good to go.

( grunts ) timber! ( chirp ) boss? what do we do with the shih-tzu? - ( chirp ) joint custody. - dog: phew... announcer: get work done now. communicate in less than a second with nextel direct connect. only on the now network. deaf, hard, hearing and peopith speech disabilitiesit .

let's do the "final trade." tim? >> brazilian supermarket cbd. >> asset managers, look at rjf. >> looking ahead. chevron. >> joe? >> don't like the price action in google. keep your eye on it. it looks lower. >> that does it for us.

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