thanks everybody for being here. a rowdy show. fast money is coming up in a few moments with melissa. >> everybody is talking about alibaba. we have the first u.s. analyst who actually initiate coverage ahead of alibaba's ipo. we'll have him on. >> straight over to you guys. >> thanks have a great weekend. it's fast money friday. new york city times square, traders tonight are here. tonight's top story why this fullback could be different. the s&p only down 6 points today. >> yes. >> it's where we are seeing weakness that caught our eye. energy stocks extending losses. russell 2000 down 1% and bio tech down nearly 1.5%. what do you make of these moves? it is within the markets where we should look. >> yeah within the markets what i was seeing was another part of this whole rotation.

we have been watching the c commodities drop particularly oil right now but look at the way the financials traded yesterday today, goldmans sachs with new highs and then suddenly at the end of the day we started to melt off as we got deeper in the day. it's rotation to the areas overperforming to underperforming. >> what areas underperforming are getting the money at this point? >> financials. >> i think financials yeah. >> oh, financials. >> you're going to be exposed. you want to be exposed to the guys that generate leverage and operating leverage in that market. it's probably the online brokers. if you look at that part of the market that's a lot of things that underperformed this market but i think as we look into next week a lot of thing versus been set up for a destructive fed announcement. >> very destructive. >> destructive being if you think about where we are today versus two weeks ago on expectations for the fed and on

the meeting next week people are saying the language has to change. a lot of that has been priced in now. it's moved 20 basis points in the last couple of weeks. not that big of a deal. but i think the dollar can be a place where you start to rally. the euro and yen and things benefitting from that. >> we were talking about this during our call in the afternoon and bond prices and yields themselves are still pretty flat when you take a longer term perspective but in terms of where we have moved since a month or sonch. >> it's all about the rate of change. it's the money europe is going to print. money coming from japan is going to come into the u.s. bond market and we haven't seen that. today that was the most concerning thing and the market looks vulnerable and i woke up this morning and i said to myself, b.k., there is a great economy. we have ecbqe, we have boj,

great economy here in the u.s. and stock market isn't higher. why not? and more importantly the russell 2000 which should be benefitting from all of this looks like it should be top so b.k. is a little afraid. >> was this conversation before or after breakfast? >> this was after the second cup of coffee. >> i've got to same color shirt on. >> financials are theoretically performing it sounds like the later stages of a bull market rotation but is that what the bond market is telling us when you take a look at the steepening of the spread. the yield curve steepened by 2% in the past month. >> it's backing up the move in the bond market tim has been talking about for awhile. that's encouraging. the financials have to participate and goldman sachs 52 week high. russell the weakness there down a percent today is disturbing

and then the transports effectively trading in an all time high. you have a lot of cross currents here. the russell could lead. you have a chance for 108. we'll see what happens when we get there. >> we did see the weakness and we've seen this as oil prices have gone lower and lower and the spreads have narrowed it. the refiner trade. it's staggering to see how much market cap has been wiped out of these names. i name down 10% on the week. >> if you look at where these guys have come there's probably a little more room to go. there's a best case scenario priced into the differential between wti and brent and in terms of product or their foreign competitors. some of that is coming to an end. gasoline prices are getting cheaper and it's good for the u.s. consumer and the backdrop of this if you look at the university of michigan surveys people feel confident and wholesale gas prices are down 30 cents from here. >> how come we're not at new

highs? that's the question. >> and the positive spin is the airlines. >> all that good is in the market. what next? >> i tell you what, the market is going to take a pause. if you throw the beginning of rate hikes being moved forward which half the street did you're going to have a period of being unnerved. these market versus been so complacent. think about the taper tantrum which is now -- i'll call it the tinker tantrum because we don't know what to call it but people think the fed is moving back into the market sooner. >> the market may have ended down for the day but some names that suffered brutal losses this year are showing signs of a come back, sprint, lululemon, best buy. some call this a dash for trash. what trash is worth buying right now? >> i think target. look at some of the other retailers that were broken companies. people assumed target is a broken company. we know about the security breach. the canadian operations are

absolutely broken but if you think about where the estimates are for this company i wish i was able to do the segment a week ago. the stock still at $62 is right now at the level before we have the worst of the news. they gave a second quarter update. we have guidance into the third quarter. you have a new ceo. margins turning. 3.5% dividend yield. this is a stock no one expects anything from and this is a stock worth owning. >> we see a blueprint and maybe less of an emphasis on food where the margins are razor thin and more of an emphasis on baby products and fashion. is this enough to pull the shoppers in? >> i think it is. you have to look at how they trade. we're talking about dashing for trash. it's all about expectations here. i think there's enough of expectations of good things coming here that targets not a bad play. >> is this a trash to treasure? >> i think it's a treasure. they have been buying back stock and had to put that on pause.

that returns now that they decide what to do with their ceo or the rest. but stock was trading 57, 58, insiders were buying stock. it was a great run already at 62. up by 70 at the end of the year. >> it finally seems to have turned. maybe the fact that the home depot credit card issue came out. >> takes pressure off. >> took some of the pressure off. >> what is your trash? >> i think it's coach. coach got slammed for all the right reasons by the way the international growth up 6%. that's only 33% of what's really coming in right now for coach. they have to make changes. they're doing that. they're changing stuff at the management area and changing the personnel there. when you look at the product mix, going toward men and trying to figure out how to get into clothing and not just bags there's areas of growth there and when you look at where they're trading right now, that's too cheap. >> 2-thirds of their sales come from the factory stores.

>> that's why they have to get that part turned. i look at the stock trading around $36 a share. i think it's too cheap and returns back up over $40. >> what's your trash to treasure? >> 3d systems and i want to be a part of this. i bought a basket of these stocks, 3d systems it's been bouncing around this 45 to 50 level trying to find a bottom here. it's going to be a rocky ride but this is something i want to be in and have exposure to for the next year or two. >> what's the option markets say lately. >> we haven't seen as much activity. a lot of that activity was part of the vault up to the upside and to the down side but i think strat

stratisus is the better one. >> that is who i would own. >> 2011 is an awful year for the coal stocks they got blasted. >> 2012, 2013, 2014. >> they have been flat lining but the chart will tell you all you need to know that. alpha natural resources anr. effectively at a 3.5 price. it's an option without any time period whatsoever. you own it until it goes to zero or until it doubles which it actually could do. the catalyst might come next week at the conference on wednesday. to me that's worthy of a playwright here. >> chinese internet giants losing steam today. what's the head of alibaba's massive ipo next week? we have the first analyst to initiate coverage here in the united states after the break. plus the pit boss seeing weird things in the trading pitts not not quite as unusual as he saw on one stock today. we'll tell you what it is. that's next.

time for some unusual activity. we go to pete for that. >> staples had unusual activity in july and they were buying september and also buying

january. now today even more unusual activity going out to december. december 14th calls in the first 30 minutes of the day they traded 12,000 of these trading around 30 minutes. at the end of the day finished over 18,000. finished at 50 cents. i do own these calls. i think it's going higher. >> demand for alibaba is surging. they're now expected to close the books on the ipo a day early for tuesday for u.s. investors and wednesday for overseas investors. he just initiated alibaba with an $80 price target. great to have you with us. >> thanks for having me. >> investors like to think about these stocks in terms of multiples. it's 26 times a full year eps for 2015 i believe which would be basically in line with the low end of its comparables. why doesn't alibaba get in your calculation a premium considering that it's profitable

and it's got such a leg up over it's peers in terms of size and penetration. >> it could end up with a premium. i could have it on the low end of 26 and 28 times and facebook on the high end at 28 times. there's few companies that grow this fast and are this profitable. alibaba should get a premium. at the very least they should be at the low end of that range which is higher than the current range set by the underwriters but it could exceed that. the low end of the range going to the higher end of the rage. >> you're trying to put a conservative price target out there. what's the scenario in your view. where could there be that we're not focussing on now and you're not focussing in your model? >> it's the fact that this is such a rare investment. it is a very long runway. they could grow for 30% for several years.

alibaba has 80% share. it's a good position to keep that share. people are concerned about the competitive situation other e-commerce companies. i think they're in good shape to keep that share and i think it's getting great economics from ali-pay which people aren't giving it credit for. >> a agree with you and it's growing 35% at a 30 multiple you pointed out that differential. what's the difference here? they're slightly different businesses but they're certainly both basically, i call them the three horsemen. these are the ways to play it. is it about corporate governance and do you really care? of course we care. >> i think that alibaba is a better way to be exposed to the growth of the chinese consumer. e-commerce is more straightforward business. once you create the network

effects they have all the sellers and all the buyers. you're actually very well protected so i think their business is a very good place to leverage the growth of the chinese consumer and the growth of a middle class in a predictable way that's not susceptible to changes in technology or consumer usage of technology. people will continue to buy and in china they're increasingly buying online and even more on mobile. >> all right. we got to leave it there. thank you for your time. we appreciate it. the first u.s. analyst to initiate coverage on alibaba. 26 times, a full year, 16 eps is how he gets his calculations for the price target in terms of how we trade this thing, i mean, yahoo! what do we do with this here? >> i know he thinks it's going to 50 but i think this 42.5 to 45 level that sort of value. can it overextend? yeah but i think you should be in the camp as we enter into this. you should be taking money off

the trabl. it's been an amazing ride from 35 to 42. pete might be right at 50s seeing options actions there for sure but it's prudent to take something off at these levels? >> it just seems to me with alibaba and yahoo! there's so much hype around this how can it live up to the hype? i would take at least a third of my yahoo! >> why shouldn't it trade at a multiple that's still a discount to its peers which are smaller and have a penetration in the market. >> i'm not saying it's not fair but the hype around the stock is all that anybody talks about. it's the greatest company since sliced bread and it's better than disney. >> but they offer it at a discount. >> are you going to be able to get any at discount? unless you're a major institution. >> that's a fair point for the retail investor out there: we've seen the hype around the chinese internet space overall. they had a crazy ride this week.

>> yeah, i sold what i had left. i sold some yesterday and i sold some today after a 25% pop in four days you have to do that. i don't think anything changed with weibo. if anything take a look now. it has more hair on it but owns 54% of weibo and didn't move at all. i like j.d..com. they're much higher beta names but great retail exposure of companies in china. >> i know you think yahoo! goes to 45 or so. >> 45 or 50. >> but in chinese internet what is do you like? >> weibo would be my best play. i would want to be on the ipo of alibaba. but yahoo! today was second only to apple. 650,000 options. >> i tried to steer you away from yahoo! >> i know but it's incredible to me and i still say undervalued. undervalued at 18 and undervalued at 30. i think the stock deserves 50.

>> times now for pops and drops. big mover. the ceo said it cannot keep one the growing customer demand for its product. >> is solar sector on a tear. having a big move back. it's also a stock that's got 30% short entrance. i am long and i am staying long. i think it goes higher. >> still up 3% after rumors google was looking to buy a stake in the company. no talks have taken place. >> it's interesting because when i heard this i didn't really think -- it didn't seem to me to be something that google would do. what was interesting was news came out right at $50. right where the support has been for the last month or so but i think you can shoot against $50 in this one. >> it is selling at a 44% stake. >> but i don't think that necessarily took it down. the whole space was down. as long as the dollar stay strong stocks will be tough to own. $20, i know that's far away.

that's the absolute line in the sand. >> drop for take two interactive down in the week. >> he said let's put this on a hole. it made a run up near the 52 week highs. they're delaying one of their release. you can pull back now and wait for a better opportunity to get into the stock. >> less bread, more alcohol. that's a recipe that will save the olive garden brand? one activist thinks so. we'll break down the trade, next. >> fast money means trading. everyone has to bring the best information each and every night. the entire trading day is the preparation for the show that night. >> it's idea generation. it's all about giving you a frame work for how to look at the market. so as the world has changed our show has evolved. i am guy adami i am fast money. >> are you fast money? go to the nbc universal store and order your fast money tee.

run with the big dogs.

another big story hitting another nfl player this time with regard to minnesota vikings star running back adrian

peterson. we learned that peterson has been charged by local authorities. nbc's houston affiliate kprc is reporting citing sources that peterson is charged with injury to a child. legal representatives of peterson say that a statement from them will be out later on today. we have reached out to the nfl, also the minnesota vikings and law enforcement officials in the montgomery county texas area for comment. we have yet to hear comments back from any of those parties. all of this coming at a time when the nfl is still dealing with the ray rice domestic abuse situation and the investigation happening with regard to when the league found out about it and what they knew and when. so melissa another issue right now with the nfl. this time with star minnesota vikings running back adrian peterson. we'll bring you more details as they become available to us here. >> a restaurant is beating on earnings but gets handed a 300

slide presentation with advice on how to cut costs and how to improve it's olive garden chain. that makes sense including easing up on bread, pushing more alcohol and salting the pasta water. >> salting the pasta water. >> they cut back. at some point they decided not to salt the pasta water. >> think of how much you could save on salt. >> everybody likes the breadsticks there. >> they bring you the breadsticks if you ask. one breadstick per person. >> everybody knows you salt the pasta water. >> everybody knows that. >> everybody knows that. >> it's not the stock though because that's what we're here for. >> beer margins are the best in the business. >> look they came in the in the middle of the range when they gave guidance. it's close to 20 times forward earnings. the chart has been awful but you still have a descent dividend. you have to believe at this

point that all the bad news is priced in. with a tight stock 45 being there that's as crazy as that might sound. >> look at -- we talked about a lot of these trash to treasure type names and often times there's names in transition changing something at the time. a variety of different names so i think this does fit into that. those guys are definitely going to be pushing to make sure they can do everything they can to make money going forward. >> all right. time now for the final trade. go around the horn. tim seymour. >> a dash for higher interest rates. they'll continue to work traded at least up until the fed. >> pete. >> secondary trade off of alibaba how about goldman sachs. the lead underwriter. >> one name strong every day today blackberry. i think you buy it here. >> what do you have coming up next? >> a little options action.

>> i love o.a. >> is carter going to be on? >> of course. star studded cast. >> huge. >> huge show. >> any time. >> for different reasons. wells fargo wfc. >> that does it for us here on fast money. next on options action, ebay denies talks with googles but could another suitor be in the works. why option traders are in a tizzy over how high the stock can go. have a great weekend. see you back here on monday for more fast. honey, we need to talk. we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now? [ male announcer ] whether you're new to medicare or not, you may know it only covers about 80% of your part b medical expenses. it's up to you to pay the difference. so think about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans,

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this is options action. tonight. >> let's make a deal. >> ebay shoots down the rumors it's in talks with google but traders are still betting on some type of ebay deal. we'll tell you who the other suitors could be. plus -- ♪ >> despite it's break down this week, we'll tell you why some smart traders are betting big on a bullion bounce. >> and it's the hardest stock in the dow to short. >> takes a special kin