anything, but we are in august and there's a lot of people off these trades. >> in terms of today's rally, in the last hour, we didn't see the same rush to buy at the same time. does that cast doubts -- >> not at all. think about this, the mutual funds have done one thing. they entered this market at 870, they chased it basically all the way up. it's not that they're dumb money, but they did chase a little bit here. so, i think they want to wait at this point. >> chasing sounds to me like dumb money in this rally. joe what do you say about today's reaction? >> i think it's an extension of yesterday. we talked about it yesterday, this is going to be what the market is. what you've seen from march until now is a straight rally higher. that's not how markets work. how markets work is they find support, they find resistance. go back to june. june, 955 on the s&p. that was your resistance level. that now becomes support in the marketplace. over head, you now know what resistance is. resistance is 1010 to 1015 in the s&p. so we are going to play the game of she loves me, she loves me not.

it's going to be a tough market. it's going to be a very illogical market, but at the end of the day, melissa, it's going to be a stock-picking market. >> they always love me not, so i don't want to play that game. for daytime watchers, steve grasso's always been spot on in this market, steadfast, saying it's going hard and it has. i'm going to deviate a bit. i still think we go to 970 s&p, break 970, trade 905 within a week. i just don't see -- i've been saying it again, i don't see the next catalyst. hewlett-packard earnings we're going to talk about in a second. i don't know if that will get us over the top. >> would we have been better off if we pulled back more, if we didn't shoot back to the up side today and instead digested the decline of the past couple trade sessions? >> i think that's difficult to ascertain that but i think when you look at that, once again, back to the volatility, everybody calls it fear. it's not fear, it's a measure of movement, it's expectation. the expectation is real, the expectation is being warranted at these levels, so don't look at the volatility index right now as fear. when we get over 30, we start

getting to 50 and 80, that's fear. right now we're looking at the volatility index measuring expected movement. we're getting the ranges that you talked about, the support, resistance, all of the various levels. that's the market we've got. >> guy brings up an excellent point -- if we break down below 970, we're going to 905. i think 950 is the almighty level that everyone's looking at. if we break that, look out below. >> we're kind of far from that right now. >> we're far from that, but we're also far from where we are when we started at 870. it's all relative, right? we did that in a number of sessions, marked up. and on the way down, we did that in two days, right? when we collapsed, nobody worried how fast we did that. >> don't get complacent out there. >> and also understand that 2009 is not going to be a normal year. look at the recovery that you have had from march, from the lows of 670 back in march all the way up to 1010. this is not going to be a normal year, so what's the best thing right now, the best scenario? again, it's to focus on companies, focus on good balance sheets and focus eventually from the shift from bottom lines to

top lines in performance, and those are stock names you want to go with. the remainder of the year is not going to be as easy as it has been -- >> though, as guy said, we're past the earnings season, so where's the catalyst? congress is out on break, we're past earnings season. what are we looking at now? >> the shift from bottom-line performance into top-line performance -- >> we're not going to do that on a day-to-day basis -- >> that's a touchy catalyst because we don't know when that will come. that could come in guidance or in terms of the next earnings season. >> i hate to do too much obama bashing. as long as we have health care, energy's on the back burner, the market's going to move higher. as long as we see somebody's there on the other side of the political world, i think markets like that. >> moving on to after-hours action. hewlett-packard out with its earnings, the last dow component to do so in this earnings season. beat eeps as well as revenue. let's go to james goldman, our silicon valley bureau chief, for a breakdown of the numbers. >> melissa, this conference call is just getting under way just

seconds ago. mark hurd, the company's ceo, is just beginning his prepared comments. he does say that through the third quarter business did continue to stabilize. you mentioned that eps and revenue beat, but let's talk about a couple key factors here, because these are significant. in enterprise, storage and servers, the company reported $3.7 billion. that's about $300 million more in revenue than what the street was anticipating and a pretty good indicator now that some of its key enterprise customers are opening up the checkbook, at least through the third quarter. another thing to keep in mind here, that the services business reported $8.5 billion in revenue versus the $8.4 billion that we saw in personal systems group. that's the home of hp's personal computer division. this is the second quarter in a row now where services have eclipsed what has historically always been hp's bread and butter in computers, and this is the one-year anniversary of the eds deal closing. so we are seeing the fruits of that now really beginning to materialize for this company. mark hurd has also mentioned

that china enjoyed double-digit growth during the quarter. that was also a pretty big success story for the company. then as far as guidance is concerned, hp, $1.12 versus $1.07 that some on the street were looking for. so a nickel or share better on, well, the revenue's maybe lighter than some people would have liked for the shopping quarter. up about 8% is what hp is projecting, though some on the street are saying they were looking for 10% growth. nonetheless, this is still considered very good, especially in the current economic climate, and we are seeing hp shares give up a little bit of the rally. but remember, these shares are up 15 days in a row. so you have to expect some of this in the activity here. >> jimmy, i don't know if you know the answer but i'll ask anyway. in terms of china, they made a big deal about the double-digit revenue growth, what percentage of their overall business now is coming from china? >> i'd have to check on that, guy, but we do know that more -- the company's business overseas is more than half revenue now at hp, and china is the fastest

growing region that hp is tracking outside of the united states. so, clearly, i'll get you that overall figure, but clearly, china is not just important for the company on a country basis, but china is basically guiding all of hp's asia business, and that is the rising tide that hp is pointing to as floating its key boats, especially on the enterprise. >> jim, got to say good-bye for now, but there was a reuters report out there saying that hp would perhaps close or sell off part of its outsourcing business. if you can kind of listen in for that, that would be great for us. >> absolutely. >> great. jim goldman. don't forget, he is monitoring that conference call for us right now. you can follow him on twitter. our page is twitter.com/cnbcfastmoney. see him there active, under way, joe. >> because i love guy, she loves me, she loves me not. i love you. >> that's really sweet. >> the bric nations make up 10% of hewlett-packard's revenue. 62% of hewlett-packard's revenue come from overseas. the bottom line here is

hewlett-packard right now trades at $45. do you believe that the trade is that hewlett-packard can sustain above $45? if you believe so, then you stay with the longs or you get long here. that's the story. it's all about the trade in hewlett-packard. do you stay with it ahead of hewlett-packard? there's an analyst day on september 24th. that could be positive for the stock, but it's all about where it is right now and where you think it's going. >> it's also about the record services profits. we talked about the eds acquisition that was a huge acquisition, already starting to pay off, but the cash flow, $3.9 billion? i love that going to the bottom line as well. these numbers are incredible for hewlett-packard. you've got to love the numbers, but the run into this number was also incredible. the last quarter, they have out-stripped the xlk, the only stock that has actually kept up with them in the xlk has been apple. this has been a stock that's been on fire. expecting it to go much higher would be lewd rouse at this point. it trades at a valuation, but i would expect a tradeback.

>> it's the exact stock in terms of ibm, balance sheets, same type of run. i think it's the levels now. you want to be taking profits. >> we will go back to the hewlett-packard story and update you on the after-hours action. in the after-hours market, oil is crossing $70 a barrel. api inventories, there was a drop there, american petroleum institute. joe, $7. >> the bottom line on oil over the past six weeks is no one has gotten this trade right. and right now you had the rollover yesterday, now you're right back north of $70. no one's positioned for it again. no one's getting the oil story right. it is extremely volatile. yes, it is tethered to the dollar right now, but everyone longer term wants energy exposure. you want to stay with the oil service names. you want to stay with the refiners. you want to stay with the integrators. but the oil futures are confusing people because they move so quickly. they move people to the sidelines in those names. here you are oil above $70. it will be a positive session for oil tomorrow once again. again, i don't think people are fully invested.

>> i think the play for -- first time i've said this in a while, it might be net gas -- >> really? >> it's interesting, net gas is on the fourth day of the roll, itnd today. a lot of people had to bail out. i won't get into why. but the hurricane season coming, it might be interesting. for get uang. look at apache and their quarter they reported on july 30th. it was ridiculously strong. the stock has had trouble at $86. you know what, gets above $86 and holds, apache might be the play. >> if you believe in the oil story, energy and all that stuff, it comes right back to commodities. got to go back to coal. across the board, i still love those names. they've got a big run. >> and month of august, up 12%, 15% -- >> this was a sector that absolutely got taken out back and flushed down the toilet, and now suddenly they're back, but look at the levels they're coming from. there's still up side. >> i want a comment from the liquidator about net gas. you were shaking your head. there aren't many people on this desk who would say play net gas. >> that's a she loves me not on

that one, sorry, guys. >> she's basing it on hurricane season specifically, though. >> stories at national gas is it's at historical levels. it's extremely high. if you look at natural gas right now, the shape of the curve bodes further weakness. i truly believe in natural gas sitting right now at $3. if you break below $3, i think you will see a complete liquidation from the long side that could take natural gas down to $2. >> you guys point, though in terms of a technical reason why it trades as a premium to the quantity? is that a reason net gas may be a play, if you're betting on the etf? >> i just know the last few days there's been huge sealing based on the ung in the gas futures. i think 10,000 contracts have been sold. that's a pretty big number. the fact that we're still here sort of holding around this $3.05 level, might be an interesting trade. at $5, i would agree with joe exactly in terms of supply and demand, but at $3, it's a different trade. that's why i'm not playing ung, but look at apache, especially if it closes above $86. >> lastly, will you calling $55

or $85 first? i'll say $85. you go. >> $85? >> you go. >> $85. >> all right. then you want to be buying oxis. >> over the next week, over the next month, that doesn't do anything for me in terms of -- >> well, it does something if you want to buy oxy. it's levered past oxy. >> if you think oil's going to $85, then you're betting the stock market's going to go down, because once it hits $85 -- >> no, that's old school. it's not going to be that way. >> it's a steady move, though. it can't spike up there. if it spikes up there -- >> it's draining everyone's pocketbooks. >> right. >> but it's seen now as oil is coupled with the overall market that moves higher, the overall market moves higher. all right, let's move on to the next trade and talk retailers, shall we? home depot leading the sector higher in the rebound after beating earnings and raising guidance. target also beating profit expectations. your advice, focused on home depot yesterday. >> yes, we did. >> saw the nice pop today. >> well, we said don't make the mistake of shorting home depot on the back of what lowe's did. they're completely different companies.

valuation, home depot's a little richer, for good reason. frank blake has done a tremendous job at home depot. the numbers back it up. they went out and raised guidance back in june, told you exactly what was going on. they're running their company better. lowe's is not. lowe's went down today, if you look. another couple percent on the back of yesterday. home depot higher. i'm not saying race out and buy home depot here, but we have been talking about it for a while. my point is, if you shorted home depot yesterday on the back of lowe's it was a huge mistake. >> yesterday was a huge mistake. would it be a mistake going into tomorrow's session? >> in terms of shorting home depot? personally, i don't like playing from the short side. i like the dips. if you want to play in the deep end of the pool, fbi, but that's not nor me. >> how about a direct play on the consumer or perhaps some of the homebuilders, the recovering of the housing market? >> i'm stay away from homebuilders. it's a little squishy there. >> squishy? >> is that jim goldman that started the squishy word? because i love it a lot. >> i'm not sure -- >> i'm short homebuilders, kb

homes, avalon bay, which is a reit. in terms of the consumer sector, if there is a play out there, i agree with guy, i think home depot basically kicked the snot out of lowe's -- >> oh! >> look at the performance of target, though. i think target is managing the bottom line phenomenally well, and now you have back-to-school season, and if you look at target and line it up against walmart with a consumer clearly looking for the cheapest possible price, that price is going to come from target. i like target. >> there's consumers out there still willing to spend and i'll tell you why. look at true religion. they had august activity in the calls. they were buying the upside calls. this trades at a 10 pe right now, 17% short interest in the stock. their earnings continue to grow. their profits continue to grow. they're expanding, their sales are going up, everything's going right for true religion, and it's cheap! 10 pe, you've got to like this name. >> do you wear them? >> i've got to tell you, i don't wear -- >> good. >> don't like the horseshoes on the back of your ass? >> whoa, what did you say?

>> he kicked the snot out and squishy? fine. let's move on. dvd wars, the maker of the machines takes on the big. a judge ruled redbox could take them on. movie studios may be in trouble if the dvd rental business continues to get more powerful. rich greenfield is a media analyst joining us here on set. i think the movie studios are already in trouble, rich. aren't they kicking the can down the road? you've got to face the facts. >> absolutely, it's difficult. the maturity level at the movie theaters, dvds were a huge growth business throughout the '90s. we went from everybody renting casettes to buying dvds and it became a massive business for the studios. but now you've got this little weed that was growing in your garden, you didn't pay attention to it and all of a sudden, there's 19,000 of these weeds all around your garden, and all your good dvd business where you sell these things to your consumers for, you know, $15, $16, $17 a pop, all of a sudden,

you've got this box sitting out front. and you go to walgreens right in times square this afternoon and there's a box sitting there that rents these things for $1 a day. and $1 a day is a really low price point when you look at any other part of the movie industry food chain. >> it kind of crept up on the movie studios at the same time you are an investor in the studios, a shareholder at this point. at what point do you say got to get out of these stocks because redbox is going to change the landscape, change the business model? >> it's a real fear. news corp has 25% of their earnings coming from the film business. that's the twentieth century fox studio. this is a huge issue. for time warner, it's 20% and you've got other companies like lion's gate where it's the whole business. >> would you say those are names to sell? those are not worth owning at this point? >> we have a sell on news corp for other reasons than this issue specifically, but i think, you know, there's absolutely a growing fear that we have looking across this whole space right now that if this issue isn't dealt with -- studios are trying to say you can't rent these movies at a redbox for 30 days. you know, just like with vod.

you can go home tonight and there's a few movies you can get with the dvth dvd release, but there's a window. with universal, fox and time warner, what all three companies want to do is say on day one when movies come out, new release tuesdays, when they hit at a tuesday morning at walmart on that day, you can't rent at a kiosk that movie for 28 to 45 days. >> at what point are the kiosks and netflix, at what point are they obsolete, or are they keeping up with the technology? in other words, are they doing the kiosks now, but they're moving into online demand type stuff? >> the reason it's a critical issue is because it's very much still a debate. there is no definitely answer. there was a court case yesterday. two-thirds of redbox's claims against universal were dismissed. one-third was allowed to proceed to trial. so this will be a 2010 court case. it is a really big issue. 60% of the studios are against working directly with redbox. 40% -- disney, lion's gate and actually sony are working with them. >> you brought up a name i wanted to ask you.

disney, how does this affect them going forward and how does this affect your rating of disney? >> look, i think this is a lesser issue for disney in scheme of the walt disney company because they have family movies. and at the end of the day, just like dreamworks, which i didn't mention, they are 100% movies, these are movies you generally want to own. >> collectability. >> there's a collectability element that's not there for a company, like a fox. that said, "bolt" was not a collectible film -- >> well, depends on who you are. >> i know. >> it depends on opinion, you know. >> and "race to witch mountain"? >> right. >> i'm sure there aren't a whole lot of copies stocked on the shelves. >> but "cinderella" and "findy nemo" you'll watch again and again. >> but "iron man," i guarantee that's a film you want to own, "harry potter." there will be films you want to own. good movies, but the problem is they don't just make good movies. >> does rich want to be a movie critic? >> i think he does. rich, thank you.

rich greenfield of pally capital. you might want to wash your hands the next time you reach into your wallets. a new study finds that 90% of u.s. currency has trace amounts of cocaine residue on it. according to the university of massachuset massachusetts, 90% of money in washington, d.c., was contaminated compared to only 17% of the currency in salt lake city, home of the mormon church. >> i'm using credit cards these days. nothing on me. >> that was the "word on the street." coming up next on "fast money" two new stories. after-hours. oil $70 a barrel and hewlett-packard losing ground. we're monitoring both of them. we'll have the latest. stay tuned. is this a bull market or just bs? a legendary wall street strategist makes the market call and he and the gang give you the way to play. and -- >> my cold, dead hands! >> reporter: this is how some people feel about their cell phones. why the tech trade could stay on top. plus, china served up the demand and our companies took a

big bite, but a china bear market could leave investors with a bad taste in their mouths, when america's postmarket show continues.

welcome back to "fast

money." we're live at the nasdaq market site in new york city's times square. let's check on a big after-hours story, oil crossing $70 a barrel. there is a drop in api inventories. the dollar index, just fyi, is flat right now, so oil and the electronics session, joe, above $70. grassley made a challenge -- >> on its way to $55. >> you said $85 or $55 -- >> i don't understand what the challenge is -- >> stock to buy. you want to buy stocks that are levered to oil. that's the only point. >> okay. >> does that help me this week? >> well, yeah, because if it's going to go higher -- >> what's the play? >> the play ahead of you this week is if oil can sustain above $70, go with the high-bidder names, go after the oih, transocean. those are the plays right now. suncorp, a name pete has spoken about a lot, another name you want to own. the key is if oil sustains above $70, and if it does and takes out the double top formation, you're going to be right, and pete will be right because it's going to go to $85 quickly. >> how long is sustained in your view, joe?

>> you need oil to sustain above $70 for the next five or six trading sessions. >> oxy, you could also short that stock. if you think oil is going lower on a day-to-day basis, you can be short oxy as well, so -- >> you really like oxy, huh? >> good point there. >> it's lettered to oil. >> want to change the topic and move on to another after-hours story. let's check on hewlett-packard. it is apparently moving lower. the conference call got under way about 25 minutes ago. it was a beat on the eps as well as revenue number. we are seeing that decline here in the after-hours session. some headlines out of the conference call. ceo mark hurd saying he is seeing improved demand for printers, that business seems to be stabilizing as well. so, so far, it seems a pitive commentary is coming out of that call. we will check in once again with jim goldman for the very latest a little later on in the show. time now for "bull market or bs." market bouncing back today after yesterday's near 200-point dive. a sudden sell-off like that has some thinking a market's top is being made. joining us now, former jpmorgan strategist who called the market

master back in 2000, doug pl k cliggott, cio of dover management. he is on the line now. >> thank you, melissa. >> what do you make of the market as of late? >> if you take yesterday and today in a glass and shake it up, that's probably what the next six months will look like, good days and bad days. >> a market martini, then, i guess. >> yesterday maria had an interesting interview with the l.a. wave guy. he basically thinks we're in the fifth cycle going lower. do you think that or is it more hodgepodge for the next six months? >> i think if we're going to move in a big way, it's probably down, not up. i'm really not a technician. i look more at fundamentals and fund flows. and i think, you know, we have had some fundamental improvement. things have stabilized a great deal. manufacturing's actually looking pretty good, but that's a small part of the u.s. economy, unfortunately. that's, you know, that's only about 9% of employment. what has me concerned when we look ahead is we've never come

out of a recession with household debt levels this high relative to income. >> right. >> actually, incomes are declining now am the saving rate, even though it's up, is still very low in a historic context. >> so, doug, if i may, where are you parking your money in this sort of environment? >> i think you have to have a bar bell strategy. i think a good part of your long exposure has to be defensive, places like health care, consumer staples, electric utilities. we wouldn't put all of your long exposure there. i think there are some global themes we think are investable. we like agriculture, we like water, we like construction and engineering. i mean, there is going to be -- >> doug, a lot of that story -- a lot of that story we as investors know. i'm going to throw something into the mix. we're talking tonight about oil prices, everybody's getting excited at the desk about where oil's going. what is the impact if oil continues to rise, gets above $75, gets above $80? is pete correct, is that damaging to the broad economy?

what happens then? >> it's incredibly damaging to the u.s. household sector. i mean, come on. incomes are going down. we can't afford a new tax. >> what's the number on oil? >> well, i think it's mostly technical. >> what's your number that throws the economy into turmoil again? >> i don't have that magic number. i just, i think lower oil's better for the economy than higher, and i'm not even sure energy stocks go up a lot on higher oil, because the big, major, like exxon, you know, chevron, the global majors, they aren't doing any investing right now, and that has to happen -- >> right. >> -- for the oil services and drillers to do well, and they're sitting on their hands. >> doug, i think the one thing that could help out with oil would be if it was a slow, steady move to the upside. then people could digest it as it happened up towards $80, $85, but if we actually catapult up like you're all inferring, i think that would be the problem. do you agree that if we moved

steadily up there, we'd digest it as we went and the gas price wouldn't be as ugly when we got there? >> i think that's true for almost any commodity. you know, if we get there slowly, you can absorb it. if you get there fast, it's a real shock to the system. >> all right, doug, got to leave it there. thank you for joining us. doug cliggott of dover management. let's head to the desk to tackle the walmart conundrum. while the overall market has rallied more than 9% this year, the world's biggest retailer is still down about 8% in 2009. so, is this giant poised for a breakout or breakdown? steve cordes of veracruz, aka, el capitan, joins us here on set. capitan, you say there is a new normal. does that necessarily mean walmart shares will go higher? >> correct, at least on a relative basis, melissa -- >> wait, i'm asking, does that necessarily mean walmart shares will go higher, even if there is a new normal? >> yes, correct. i'm saying that because there's a new normal, walmart shares will go normal -- sorry, will go higher. will go higher.

if you believe in the new normal, the thayer promulgated mostly by pimco, the thought that we'll have to recalibrate tour economy to lower growth, lower employment, lower expectations, more savings, an era of frugality and thrift, a kind of economy of hoarding. in that environment, i think walmart succeeds in an era of thrift. because of that, walmart has underperformed the last several months, but i think it's time to reverse from lagger to leader. >> what is the catalyst to get every investor to realize steve cordes is right, walmart shares should move higher because it hasn't worked so far this year? >> correct, but it has in recent days, and that's important. in august, this trend is reversing. i brought a chart along, if we can show it. it's a chart of walmart versus a basket of high end. i chose four high-end stocks -- harley-davidson, nordstrom, coach and morton steakhouse. as the chart is rallying, walmart is growing as a percentage of the basket. if it declines, it is declining as a percent of the basket.

it's a new untrend, but there is an up trend in place. walmart is starting to base outright and on a spread to this high-end, aspirational type of names. i believe this trend has legs, so it's something we are investing in. >> how about if we don't get into the new normal, do you still see the stock as a buyer? >> a buy, but a boring one. i think it's only a place for safety in that regard. walmart has basically espent the last ten years around $50, it really has. but boring, in my view, after the run we've had, boring is good. >> right. it's a bunch of people at home that wish their stocks stayed around the level where they bought him. >> boring is good. >> not bad. got to leave it there. >> and steves dressed alike today. our moms put us in the same outfit. >> great to see you. the tech comeback story, coming up. the company that makes the chips inside your cell phone and your 52-inch plasma's up 52% this year. the ceo explains why this semiconductor stock is beating the pack. and guy has rolled the dice on one casino stock. so far, he's hit the jackpot, but is he really to cash out?

are you ready to cash out? >> i can't tell you! >> find out after the break. oof!

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we told you about oil crossing $70 a barrel in the after-hours story. the other story we are following, the decline in hewlett-packard shares upon the release of earnings. a beat on the eps as well as revenues. the conference call has been going on for approximately 35 minutes. jim goldman has been on that call. jim, what is the latest? >> yeah, just a couple quick nuggets here, melissa. we're seeing hp give back a big chunk of its after-market rally as soon as the numbers were released, and that might be the same problem that cisco systems was suffering when it came out with its earnings, essentially talking about a turn-around, not necessarily here, but on the way or we're getting indications that things are improving kind of sort of. it's that kind of modest approach right now dampening those expectations. hp says that is the prudent way to go, and i think that's what's spooking investors. people wanted to hear something, well, a little bit more optimistic than what we're getting right now. and also, the good news may not even be such good news when you're talking about that improved demand for printers, because very

uncharacteristically, hp may have been caught flat-footed. demand improved so much for printers that there simply wasn't enough supply to fill all of those orders. so, a company that is so steeped in operational excellence under mark hurd may have cut too close to the bone as it was, you know, basically so focused on those bottom lines as well as the margins. so, we're seeing that also maybe not be taken as such good news. it's a great problem, but nonetheless, still a problem to have. >> jimmy, don't you think, had this been back when intel was reporting, a month and a half, month ago or so in the earnings cycle, this would have been received a lot differently than it is on a stock that's already made a 20% move? >> i completely agree with you. there is no question that timing is playing into this. but you know, keep in mind that hp, because it's reporting so much later, gives us a little bit more of a window into the current quarter. and that's also something that people are taking into account here, and that may not resonate as well as maybe somebody might think tomorrow. maybe hp is seeing little bit of softness. maybe the company is feeling a little less sort of secure in

where the guidance is going from here. things are pointing in the right direction, but mark hurd is just fallen short as far as being as optimistic as people wanted. but a month ago, this would have been a lot different. >> if we can check on the qs, jim makes a good point about this happening much later and what does this mean for demand for technology later in the quarter? it will be interesting to see the impact on the trade sector. slightly lower, not much of a move. as the news digests, we'll certainly watch this. jim goldman, thank you very much. we'll check back with you as news warrants. from flat-panel tvs to dvd players, this company provides some of the magic behind intersil. they are up 50% this year, guiding the quarter revenue above estimates. does that mean the demand story is back? joining us, the company's ceo, david bell. thanks for joining us. >> thank you, melissa. >> in terms of the consumer, what are you seeing in demand in the end markets that may indicate the worst is over? >> well, demand is clearly down

from a year ago, but what we're seeing is demand looks like it's probably stabilizing to some degree. visibility's still pretty poor, hard to predict exactly what the christmas buying season's going to be like right now. we're kind of right now in the midst of back-to-school, and we have to get through that and see how back-to-school is and then go from there and see how the rest of the holiday season's going to be. but clearly, demand is down from a year ago, but the inventory is pretty well cleared out of the channel at this point. so, we think we're pretty much shifting at consumption at this point. >> are you seeing the demand in back-to-school in terms of the pcs, in terms of mobile phones? >> we're seeing it in both, both pcs, a lot of it notebooks and netbooks now, phones. antidotally in the evidence now, back-to-school looks good. so some of the people in the southeast going back to school now. looks like early returns are good news. >> you have a great balance sheet. what does it look like going forward from the standpoint of any acquisitions along the way? we talk about technology all the time and all of the consolidation. is there any ideas for you guys going forward to inorganically

show any growth? >> just a little background, during the past year, we have done actually four acquisitions of private companies. so, this downturn is discouraging, but we're taking advantage of that. we are one of the first to restructure in the industry, and i think we're really doing the best in our semiconductor industry at exploiting this downturn, doing acquisitions. like i mentioned, four of them during the last year. i think there could be other opportunities coming along. it's a really bad time if you're a start-up company, because unless you're cash flow positive today, your options are basically two -- you either can get acquired or you go out of business. so, we got the pick of the pack here and we get to get some really fantastic, strategic acquisitions for really good prices. >> mr. bell, thank you so much for your time. we appreciate it. david bell, ceo of intersil. the stock is up 50% based on what mr. bell says. do you think this is a buy? >> i think what he's saying in terms of gross margins this quarter a little more disappointing than last quaer, down 54%. do you think all the acquisitions affected gross margins or are you happy with 54%? >> we think it's going to go up from there.

going back a few years ago it was closer to 58%. we actually think we've done pretty well compared to most companies. our sales were way down, gross margins were down less than 4%. and what we've told the analysts is that we're charting a path that by the end of 2011, we expect our gross margins back to 58%. there's a number of things doing that. product mix is one of them, cost reductions, doing some of the same things that our customers are doing to us, squeezing for prices. we're squeezing our suppliers for some of those same reductions. >> all right. hope to have you back before 2011, david bell. >> thanks, melissa. time for today's edition of "pops and drops." we start with a drop for the parent of tj maxx, down 3%. joe? >> how could you have disappointing earnings in this environment? i don't understand that. tj maxx, marshals, terrible earnings. this stock probably gets in around $34 right now. >> pop here for agilent. >> they beat by 4 cents on the year earnings, got a great outlook. they actually can't keep up with demand right now.

>> drop. >> an application was put on hold by the fda, but this is one we've been talking about for a while. went up to $9.60 a couple weeks ago. this is a lottery ticket worth owning. >> and this was up 5% along with the smartphone makers. >> palm pre looks excellent. no matter what the recession does, you're not giving up. that's your cell phone. >> all right. we've got to drop here for the zimbabwe dollar, also known as the zimba. i just named it the zimba. it is officially dead. the government has replaced it with the u.s. dollar, the south african rand in a record to curve record world inflation. it now costs 3 billion zimba to ride the bus there. >> every time i talked about the zimba -- >> what'd they replace it with? old glory. usa dollars. coming up next, you can blame yesterday's sell-off in the u.s. on rumblings in the chinese markets, but will more shanghai swoon send the s&p into

sell-off mode? cnbc's amanda drury is here to help us with the trade as china, the world's growth engine, begins to show signs of sputtering. back in a moment. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick.

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♪ was it a deal with the devil? china providing us with cheap goods in exchange for trillions in u.s. treasuries. they get access to our inseichable demand and we get access to their unending supply of electronics, clothes and machinery. now, for better or for worse, the chinese and american economies are linked at the hip. sunday night it was for the worse. as the shanghai sold off, it left a mess of u.s. markets on monday morning. what's worse, shanghai's shares are already down 10% from the highs, and some say headed for its own bear market. as decoupling dies a slow death, is there any way to untangle a u.s. recovery from an unraveling chinese market? let's trade the globe. cnbc asia's amanda drury joins us on set to help us with this trade. so, is it true, can the u.s. recover without china in any way? >> well, i think it's going to be very hard for you boys to get a grip on this, but actually, all roads do not lead to wall

street. increasingly, yes -- >> what is that? i can't believe what i'm hearing! >> she speaks in tongues. >> i'm speaking australian. anyway, let me explain it in english. increasingly, it seems as if all roads are leading to and from shanghai, because obviously, economic power is gradually also shifting over to the east, and the crisis has sped this up, right? people are now arguing, if you look over the last two years, the shanghai market has actually been quite a reliable global indicator, a leading indicator as to what's going to happen with worldwide stocks. >> stock market as opposed to the economy. >> absolutely. stock market. >> even though it's an immature market that doesn't have a lot of the efficiencies -- >> even though it's an immature market that doesn't quite function exactly the same way as say the market here. for example, let's flip back and take a look at the summer of 2007. we saw some sharp falls in the chinese market, and that was a precursor to the start of the freezing up of the credit market. at the beginning of this year, which was one of the markets that fell ahead of the others? the chinese market.

and now, since the beginning of this month, we've seen a correction in the chinese market of about 16% off its year highs, and now it's starting to see some shakiness in the market as well. >> amanda, i completely agree with you on china. i think china definitely leads. it was a stabilizing force in the quarter, but in terms of investing and actually trading, the play has actually been to go down under. i'll take you down under on this one. >> i'll happily go down under with you. >> oh. >> oh, my god! wrong, wrong, wrong, wrong. i was thinking -- i will always -- my homeland. >> i know, absolutely. but let's talk about the australian currency. >> good thing we're not live. >> guy's falling apart here. he's crying. >> let's also talk about the australian equities market, which has been one of the top performers this year. and here domestically, the ambassador loves. it i know that i've tried to get investment in. you still believe the australian dollar, the australian currency was basically benefits giving china what it needed. is that still the play? >> absolutely.

well, i was talking about this just yesterday with erin. the fact is, there's quite a close correlation to the shanghai stock market and the australian dollar. and it's no coincidence, because obviously it's a commodity currency. it gobbles up most of the world commodities. who makes most of the commodities? australia ships most of our commodities over to china, they have an insatiable appetite for it. so, when the shanghai economy or stock market shows any kind of jitters, we also see the australian dollar show jitters as well. and an excellent example of this was, i was covering the aussie markets last week and we got some great data at home, the aussie dollar shot up and then the dollar went down and so did the australian dollar. >> if you want to hear it, you want to hear it in that face right there. >> how much longer are you here for? >> three weeks. >> glad to have you on "fast." >> thank you. united, signa, wellpoint all up on the week in hopes that obama's option will be dead on arrival, but the options market isn't sure.

options action trader brian studland hashes it out. welcome to the now network. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. bringing you the first and only wireless 4g network. sprint. the now network. what's on the minds of independent investors? let's ask. when i trade, i want a straightforward price. they lure you in with a $5.99 trade, then charge you 15 bucks. you get a low price, but only if you make a ton of trades. at td ameritrade, every online stock trade is just $9.99. period.

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time for some options action. recent polls show president obama's plans to reform health care is cooling, which in turn has stocks heating up. but could the gains be short-lived? for a look at this opportunity,

brian sutland is joining us, president of sutland equities as well as an options actions trader. brian, what are you seeing in the space? >> one thing that's popped up on my radar recently is united health care. a lot of options activity going on in there, call-buying, playing both the short-term buy for the upside in united health care and a longer term. what you see is january call buying. what does that mean? option traders are predicting that possibly the obama plan, in terms of a public plan, could be a dead topic. they're planning on getting in, saying the private sector is still going to be around, still going to be a major player. united health care is a major player in health insurance, and it seems like for the long term, at least through january, there will be a move to the up side for those. >> only unh or also the other names? >> actually, what i'm seeing, too, a little bit is volatility rising. what does that mean? options traders predicting sizable moves coming up over the next 30 days to couple months out. not just united health care. you're looking at the select sector, xlv is a name, cardinal health, options players playing

that area, too. so definitely some movement. even though it's not moving around a lot right now. >> and other names, signa, wael point, people are betting on the same thing and they figure every one of these could profit. and they're rolling the dice, using the options because it's cheaper than the stocks. the stocks keep failing. >> what's so surprising is the january strike, to go out that far on these names. there's a lot in between. congress comes back into session, who knows? >> there's definitely been debate about that, you know, and stocks aren't moving around a lot right now. so for people to go out to january, say buy some calls and play the up side off of january, that's a bullish expectation. >> brian stutland, thank you very much. you can watch us at 8:30 p.m. eastern time. final trade after this break. imagine... one scooter or power chair that could improve your mobility and your life. one medicare benefit that, with private insurance, may entitle you to pay little to nothing to own it.

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time now to reveal who made the most money today. the top spot goes to elaine wynn, the wife of wynn resort billionaire steve wynn who sold $415 million worth of the couple's common stock in an effort to have more cash on hand in anticipation of their pending divorce. the shares represent less than 10% of the wynns' holding in the company. time now for -- >> and they were cheaper to keep her? does that go over, or -- >> let's go to the fine trade.

kick it off. >> technology rallied today, but one name that didn't perform along with it google. i actually bought some puts. >> i've got an itch about net gas. apache. >> all right. steve? >> apple. i've been waiting for an entry point. i'm tired of waiting. >> pete? >> i've got to like palm. the special sauce, the special sauce, the rbc analysis is talking about, it's all these apple guys that keep coming over to palm. giddyap. >> i'm melissa lee. thank you so much for watching. watch tomorrow for the "halftime report" and on "fast money" on cnbc. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 29 es 350.

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i'm jim cramer and welcome to my world. you need to get in the game! go out of business and they're nuts, they're nuts! they know nothing! i always like to say there's a bull market somewhere. "mad money," you can't afford to miss it. hey, i'm cramer! welcome to "mad money"! welcome to cramerica. other people want to make friends. one more days like today, my job, entertain and educate, make you a little money. call me, 1-800-743-cnbc. this market answers objections better than jack mckoy from "law & order."

it puts the bears in their place quicker than simon cowell in the first rounds of "american idol." it treats the nay sayers the way old number seven streets man's best friend. maybe i shouldn't have gone there. that's right. by the time newly born cubs as well as kodaks take this market down 3% for a whole host of good reasons, the reasons get rebutted one by one and the bears are left questioning everything, including exactly what they are known to do in the woods. consider why we sold off. let's take them down! reason number one, the obliterated consumer, who has stopped spending, as we know from those nasty july retail sales. therefore, no