. the state of american business, the u.s. chamber of commerce ceo on the challenges and opportunities facing owners and investors. squawk alley tomorrow, on cnbc. "fast money" starts right now. live from the nasdaq market site overlooking times square. i'm melissa lee. your traders on the desk are pete, brian, karen and dan nathan. tonight on "fast," the bid for safety. the tlt rallying and a winning trade this year and the man who called the august rally swoon and tells you where he sees yields going next. and go-pro just opening after being halted. the stock is tanking behind the job cuts and weak guidance plus what the ceo just said to employees. and later jp morgan kicking off bank earnings tomorrow. they hit 52-week lows today.

a well-known wall street inviter has a way to play the financials and it could bring you profits. but first the selloff on the streets. the stocks ending slower. the s&p 500 breaking below 1887 at one point, seeing the worst day since september 28th. all three averages ending with losses of more than 2%. so, what the heck happened today, pete najarian? should we brace for more losses ahead. >> the only reason i would say probably to that question is we've been watching volatility for a long time and since the beginning of the year and we've just watched an elevated level. we continue to elevate and never seem to be able to pull back. when we are up on the s&p, we've had that happen a couple of times, including today, we don't see volatility in any fashion. it has been above 19 since the start of the year and the volatility, the sentiment has to change there. and we aren't seeing that. and we started off the day,

energy and -- oil was up, and energy stocks were up. today the most interesting thing wasn't the fact that they turned ahead of the market, refiners started getting pummelled as well. so it is not just going after the fang stocks or those -- that are profitable. they are looking at the refiners. that was the one part of energy where you said you could be here because it doesn't matter. >> it felt different today. i was on the in the 2:00 hour and we saw the lows of the session. you felt like you felt in august when people were being tapped on the shoulder and margin calls involved in the downward pressure we're seeing at that point. >> it started to me to feel panic. and it was -- and it was uneventful. on a day that would be nothing, felt panicky. i'm surprised, pete, i'm surprised the vix didn't spike more. why is that? >> it tells me there is not quite the panic that we thought.

and i heard traders talking about you could smell it on the floor and this and that. we got the move to the downside. but it wasn't dramatic. 48 points in the s&p, that is a big move. but we've seen much worse where we've seen full panic and margin calls and the rest of it. >> you focus on the vix all you want. here is the main point. the ingredients that made the bull market from the bottom in '09 no longer exists. and the volatility we've seen since the fall of 2014, it has to do with the end of qe and the end of last month. i don't know who the increment alibier is. most u.s. stocks have been rolling over for months now. the fact that the s&p 500 has joined in the fact and is down 10%, yes, it makes sense to get your antennas up and think about what you own and where we're going. we think about the october 14th low, that 1820, we are going through. it is happening. the bull market is over. you hear this all of the time. it is a stock picker's market. you could have thrown a dart for

the last five years up until last october and bought stocks and you are probably going to make money. now the case is you could throw a dart on the short side and probably on rallies and stocks are going lower. >> you have been doing that. >> yeah. and i have been. and to me, the writing is on the wall. could you look at your favorite indicator, it is not telling you much. you are not trading off the vix -- >> well -- >> to catch a point. but to make a long-term investment, not the vix. >> what did you do today? >> i covered some short banks because i had some options expiring on friday. i think that has a lot of room to run. for me, in particular about very short-term what happened this week, look, we had two days in a row we were up over 1% or 2% in the s&p 500 that just got slammed. so then finally today when the market reversed, it was like everybody said that is it, i'm not going to try to buy this dip any more and we had a big selloff. i agree with dan. i think 1810 or 1820.

i still think 1620 is in the cards. this is a bear market that will last for a long time. >> what did you do today? >> i made a couple of trades. one was rolling down energy exposure because i think some of the names will continue to go lower. i did buy one regional bank but i'll hold that on for later on. >> interesting. karen. >> i bought back some hedge. i did that yesterday. that clearly wasn't a great thing to do. but i just wouldn't be the least bit surprised, it does seem oversold to see a short-term rally. >> well let's bring in a we well-known wall street investor raoul pal. good to have you on set. >> good to be here. >> and do you think the investors are saying we are in recession and maybe the growth isn't in tact any more. >> the growth haven't been at these kind of levels outside of a recession, maybe outside of 1985. we see global growth in the chart we toked about last week when i phoned in. those things are out there and

it is suggesting that the market should go lower based on the fact that the global economy is getting worse. >> you've been warning about this for quite sometime. and when you came on the show and talking about this, you were probably one of the few people out there. and now it is more of the consensus view. we've had rbs come out saying sell everything. we've had jp morgan saying sell rally. stock gen, albert edwards, issued a extremely bearish forecast, excuse me. are you getting concerned it is maybe becoming consensus. >> at some point when things trade it is consensus. it will be. that is fine. it doesn't mean we'll get a bounce. the eem is down 30% from the high in april of last year. we'll get a bounce in that stuff. but the markets, u.s. and europe and japan will play catch-up to the down side. >> and you are waiting to put the shorts on. what are you waiting for? >> what happened in january, everybody has a fresh pin and puts all of the trades on and everybody gets washed out in

february and that is the time to re-set the positions properly and then trend longer. so it is kind of waiting for a bounce. >> so i'll ask you a question that people have been asking me. what change -- what changes economically? is it china qe or fed coming back with qe that would change your mind on the bear thesis? what is the good news out there? >> the fed has a long way to go from a tightening to a neutral bus and doing something and maybe on the fiscal side. that whole process takes time. it is that whole gap. whether it is nine months or 12 months or six months is where the danger lies. and i don't see anything out there yet. i think china will devalue in a more way. and people will assess if that will stabilize things or not. i don't think it will. i think china's situation is bad and the rest is slowing down. i don't see anything on the horizon that could mean a change here. >> in the meantime, one of your top trades for 2016 is a bit to

safety trade, the bond market. where do you see ten-year yields going. >> i think they get a half percent. maybe not this year, but perhaps next year. that is the same where it is in germany, sweden, finland, across the developed world, only in the u.s. they are not and maybe australia. that is where i think they are going. and i think nobody wants to be in the market. it is a position that nobody is in. and it is a good opportunity. >> so, if you were the fed, then, would you be thinking, absolutely off the table or reverse the policy they've taken. how do you get to a .5 on the scene aero without a -- scenario without a fed drop. >> so gdp plus inflation. and if you think we have recession and no inflation, that is where you get the half a percent. >> so if we're in recession, do you think they reverse? >> they have to reverse at some point. and i don't think it will be qe

next time. a rate or targeted fiscal stimulus by the fed. >> so in a world in which rates or 10-year yields are half a percent, which seems unthinkable, what would the market be? i think it would create mass panic? >> it depends on when it happens. on the recession, you see the big market selloff. the 1600 level is maybe after the first quarter and then we pause for a lot longer. but overall japan has had half a percent interest rates for everything. and the market goes up and down. but the economy is structurely slow and inflation is structurely low. >> and there is bold forecasts that you've laid out casually, is that the ten year yield would hit half a percent next year and the s&p 500 could go to 1600 in the first quarter of this year. >> yes. it is possible. again, i don't know the uncertainty but the probability

is pretty high. if the u.s. economy continues to weaken, somewhat. then it is easy to see the s&p at 1600 and then reassess. the russell is already down over 20%. >> right. thank you for coming by. >> leave it at the end of the world right there. >> i know. [ laughter ] >> raoul pal, the founder of real vision tv which everybody should check out. what do you make of the forecast? >> well, he said it in a measured way and that is why you should listen to that. but if you are an investor out there and worried about the 22% selloff in the russell and the s&p, what are the sort of bear markets that we've seen in the last 15 years when the s&p corrected 50%. 2000 to 2003 was brutal. and it was excruciating where every year it went down. that was a protracted bear market. that was difficult. the only reason why 2008 was the only year of the decline was because the fed spread the balance sheet.

which is what pal is saying. and if you throw fiscal stuff at it, it won't work and it will be a tougher environment for stocks in the meantime and that is what he's saying, i think. >> and you are questioning whether he could get point five percent and the fed has to step in. >> yeah. or maybe they reverse course by doing something else as you suggest. but, yeah, i can't see -- i can't see those two things being consistent. fed policy in a more -- in a tightening mode and recession and half a point on the ten-year. they have to do something. >> most -- that would be the signal coming from the ten-year. but it is going to be this period of time, think about it. they just -- a couple of weeks ago said everything is fantastic. let's raise rates. now they have to back that off, then they have to get to the point where maybe they cut rates. then let's say they did qe, they have to convince everybody to do that. and what raoul pal is talking about, you do something on the fiscal side and the end finances, that is the end game

here. imagine the political chaos that will cause. between now and then, you have a lot of uncertainty and the market is not going to like that one bit. and in that period of time, you could see people fly to safety. so actually, tlt, great, it pays 2.5% dividend, 2.6% yield. that is not so bad. it will look fantastic in a year. >> are you zipped up in the old bear suit along with b.k. >> i'm not as zipped up. but i am on board on the energy and the materials area that i think have more downside to go which does pull down the rest of the market. i think that continues to happen. until we see volatility subside, an opportunity, or if we see it spike, that might point to an opportunity. >> the s&p 500 breaching 500, what is the next level to watch. you won't believe how low one technician thinks stocks could go. and go-pro opening moments ago and the stock is getting slammed. the latest on the company layoffs and weak guidance. and later, it is the one stock that despite a slew of bad signs bucked the down trend.

behind chipolte's big move higher and what the ceo just said that has investors so excited. and as we head to break. look at the s&p 500 heat map. red across the board. we'll be back on this very tough day for the markets right after this.

go-pro shares are tanking as the stock reopens for trade. josh lipton is in san francisco with the story. josh? >> reporter: well, go-pro stock down hard here in the after-hours, melissa. and that stock had already been under real pressure even before this news, the stock had been down more than 75% in the past 12 months. remember, that stock was near $100 back in october, 2014. of course, investors knew the company was under pressure. but surprised here obviously by the degree of pressure. go-pro is saying it sees q4 revenues of about $435 million. the street wanted to see $512 million. and they see revenues of $1.6 billion. analysts predicted $1.7 billion. in a letter to his employees, the go-pro ceo blaming that poor guidance on the hero four session, the new camera they

larged last summer. was initially mispriced. separately he wrote to employees about a 7% reduction in work force. in that letter go-pro woodman saying this was a difficult and deeply emotional decision. he said but it was a necessary one. he adds the company has no plans for further cuts in head count at least right now. for the greater good of go-pro, woodman is saying this was necessary. i will add also that zander lurie is resigned from his roll at svp of give entertainment. he will serve on the board of directors. prior coming to go-pro he was an executive at cbs. the question now is what is next for go-pro. woodman in the letter talking about some of what is ahead, the drone he talks about, the move into virtual reality. but at the end of the day it is about woodman and the rest of the team, tony baits included, learning from the mistake of 2015 if go-pro bullets because

you think they will learn from that mistake and expand users with a new camera everybody will want to own in 2016. back to you. >> josh lipton. for more on go-pro, let's bring in andrew gir witz. great to have you with us. in terms of the job cuts, is this an admission they are learning from the mistakes and they did do things wrong and they are trying to turn the ship around? >> i don't know if the job cuts point to that. i think we'll know whether they've learned or not once we see the new products. unfortunately we won't see anything new until the summer or fall. so it looks like the challenges will continue in the near-term. >> the summer or the fall. so there are basically no catalysts for growth at this point for go-pro for the next six to nine months. >> yeah. i mean, they said the drone comes some time in the first half. we think it is may. they said they learned from the mistakes. one was launching the session in july. so either we get something a

month before that or you wait until the fall school season. so you are looking at the very earliest a product launch in may, if not you are looking at august or september. it looks like it could be tough. >> usually we don't think much of svps resigning but this was in the entertainment part -- the media part of the business of go-pro. does this underscore the point that go-pro at the end of the way is a hard ware company and that media dream that certain investors had, that is dead? >> absolutely. it depends on what he was overseeing on the media side. one of the concerns a lot of us had was that they sell an action camera. they've argued for a long time they are not an action camera. but the way they market it through the media clearly is action sports. we believe they're going to change the messaging in 2016 and we believe they have to change the messaging and that is one more thing they have to learn from. maybe it is related to that.

maybe it is not. it is too tough to tell when somebody resigns. >> andrew, it is karen. with the hit in the stock right now, it looks like the overall enterprise value is about $1.2 billion or so. that would not be a big bite for many companies. do you see anyone coming in here and buying it, trying to take advantage of this huge move? >> well, yeah. and it is a great question. we get that question a lot. because they do have a great brand. but at the end of the day, they have very little i.p. i think it is less than 50 patents. that is what typically companies are buying. they haven't been able to get traction on the media side so it is not like a beats type acquisition where you are buying guys who could build a real service. so no, i would say it is not really an acquisition target at this time. quite frankly, i doubt nick woodman would want to sell. he is a prideful guy and a good guy. i think he wants to stick around and show people he could succeed in this company and selling it -- a little bit more than

what it is valued at is probably not going to show that. so i don't think it is a target at this point. >> andrew, thank you for phoning in. of oppenheimer. i'm going straight to pete najarian. because you've been predicting that a certain stock called apple will swoop in. >> this is 25% cheaper in the after-hours session. >> you just wonder. now that you are in the ballpark of something based on where the stock is now and karen points out $1.2 billion, somewhere in that range. the beats acquisition was $3 billion. and that is the biggest one they've made. i'm talking about apple. that is pretty intriguing to me, that maybe this is the time, if they want to do it, that would be the time to do it. if they want to do it. and ambarella has been absolutely smashed along with go-pro. so this is dragging other names down. but that chip supplier getting crushed since the go-pro missteps, that stock has been getting hit as well. >> it is shocking the lack of i.p. that groin has. fewer than 50 patents. >> this is a problem. at one point in time, while the

market was ripping, i thought that the market would give this company a pass and say, okay, it is going to make it to be a media company. not in this environment. it hasn't been that environment for six to nine months. so i don't think anybody buys them. i wouldn't short it. it is already got an -- gotten absolutely crushed but this company is in trouble. a news alert. a change to the s&p 500. seema mody has the details. >> extra space storage is joining the index, replacing chub, which is acquired by acea. this is affective by january 15th. up about 1.5% after hours. for now, melissa, back to you. >> thank you, seema mody. still ahead, intel out with earnings tomorrow after the bell. what one trader is saying we could see a huge move in the stock after the report. i'm melissa lee and you're watching "fast money" on cnbc. the first in business worldwide. here is what is coming up next.

>> a top technician explains why the worst is still to come. plus, big banks on de. as jp morgan kicks off earnings tomoow. we've got an undercover way to play the financials that could bring you big profits. much more "fast money" after this.

welcome back to "fast money." check out the fang stocks getting hit hard today with the rest of the market. kicking off the top trades. a tough start for the year for these names that ch were the tech leaders last year. combined they have lost $113 billion in market cap this year alone. netflix is in a bear market right now. it is down about 21% from the high. the rest of the bunch are down 10%. so they are in correction territory. >> the problem here is that this was always going to be the last battle fought as far as technology was concerned. there were crowded change from a sentiment standpoint and what we were talking about off air, there is a valuation issue. and people are justifying it on the way up because it is working. now they are not working you may see it the other way. you may say google at whatever times trading at 20 times forward earnings, that may not be there this year, maybe it is a little expensive. and just want to make one point. sentiment was -- i know it wasn't on valuation with apple.

but no one thought apple could decline 25% in the last six months. it has done that. so it could happen to these stocks. i know they are long-term hold gz. google is in a different batch than amazon and netflix in my opinion. that is worth more five or ten years from now than it is from now. >> does that scare you karen? you are a holder of apple. and you saw that decline. and nobody thought that would happen. you are a holder of google. is that a worry that is the next source of fund stock. >> it already has. down 10%. would you like to buy some. i think there is positive catalyst, particularly in google. i'm very interested to see once they start to show us the -- when they show us alphabet, when i will not get used to and the moon shots taken out, i like it. i'll probably buy more before they report. >> because the transparency is going to be good? >> i think so. i don't think they would do it

otherwise. >> that is scary. >> you mentioned, it is a source of funds. people start to hit the names. and when you look at the p.e. of most of them, not google, but the rest of the names, when you look at the p.e., you think why wouldn't you take some risk off. and i'm looking at facebook. i'm interested in the buy side. i still see the growth they have. the high premium, i would be using the options, not the stock. but when you look at the stock, it was absolutely on a sprint to the upside. yes, it has pulled back significantly. now 95. if this market keeps heading south, facebook will continue to be a source of funds. but i think you have to be looking at that when we start to see any turn in the market. >> so it is on your buy list. >> absolutely, would be. >> up next, shares of chipolte rallying despite the down market. the chairman spoke at the icr conference addressing the fallout from multiple e-coli outbreaks. morg morgan brennan is in orlando with the details. >> chipolte meeting with the investment community here in

orlando, florida, at the icr conference. four top executives in attendance, including both co-ceos discussing the mexican chain's plans to boost food safety procedures and ramp up marketing to bring back business. so they say 2016 is an investment year and it will be, quote, messy it terms ever earnings and margins and not an efficient business model this year but they look forward to 2017 when they expect to have most if not all of customers back. this is the most important thing they could do, pulling back and driving the traffic to recover margins. so the company believe that's strong unit economies will recover. they are still planning to open as many as 235 new restaurant this is year. executives saying that they met with the cdc last week and that they are, quote, confident that federal health officials will call to an end the e-coli outbreak soon. meantime, chipolte plans to hold a company-wide meaning next month with the more than 60,000

employees and plans to roll out a much bigger marketing campaign in mid-february, to quote, invite customers back into restaurants. so we saw shares of chipolte get a bounce today on this. up 6%. back over to you. >> morgan brennan, thank you so much. and the comments about the customers and having them back by 2017 doesn't sound positive. but what did sound positive is they are going full-tloting in expansion of stores and the growth story is still in tact with this multiple? >> i don't know. do you think they will go full throttle. >> that is what they just said. >> i know. but i don't know if they'll have that choice. if their earnings are falling, they are not going to have the ability or the -- the investor backing to go and say let's open the stores. i bet you in 2016, they cut back on those 235 stores, i'll tell you that much. >> are you positive on chipolte? >> i could. but this news has just been so bad for so long. and we've watched the stock go from 700 plus to under 400.

and now we get this great lift today. but i think it is where the hands have to be off because it does trade at a premium valuation. it is like many things. you could love them while they are moving in the upside, but once the negativity comes in you have to pull back and there is nothing but negativity. >> we had a couple of banks positive on the comment. once the cdc investigation will come to an end which they believe is soon that that is a positive catalyst for the company. >> at some point -- the problem with this business, and we talk about it all of the time, it was priced beyond perfection before. so it is not like you are buying it at a crazy cheap multiple here. >> right. >> so at some point, yeah, i would buy it. i would take that risk. it isn't quite there yet. still ahead, the pain in the markets being felt across the board but with the s&p dipping below 1900 what is the next key level to watch. the charts could see another 17% move lower. much more "fast money" right after this. pert from at&t?

yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep it all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. get expert advice for your small business at att.com/small business. attention investors! vectorvest mobile is here and it's free! make faster, smarter, better trading decisions with ctorvest mobile. the most powerful app or managing your portfolio from the palm of your hand. only vectorvest mobile analyzes, ranks and graphs... ...over 16,000 stocks worldwide, everyday,... ...and gives you clear buy, sell, hold recommendations... ...on every stock; anytime, anywhere. vectorvest mobile comes free with your vectorvest trial. get it now! visit vectorvest.com/mobile to get started

♪ light piano today i saw a giant. it had no arms, but it welcomed me. (crow cawing) it had no heart, but it was alive. (train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing".

welcome back to "fast money." a brutal selloff on wall street landed all major indices in correction territory. the dow dropping and the nasdaq plunging 3% and the s&p closing below 1900 for the first time since late september. in the second half of "fast money." financials getting hit hard. we'll tell you why one veteran investor said to expect more pain in the space as bank earnings kick off tomorrow. but first, the s&p 500, as we mentioned, broke under the key 19 h00 level in the selloffo does that open up for more downside. jonathan crinesski joins us. what do you see in charts? >> s&p 500, right down around this 1880 level, that is the uptrend line from the october

2014 lows through the august lows. it would be reasonable to expect a bounce there. but ultimately we think the third test of the august low is probably going to give way and then you are looking at the 1820 level which is where we found support in february of 2014. the bigger issue for us is we still see people looking to buy support. where is the market finding support? you have to remember. we're for the first time, in three years, in a down trend. the moving average is to the down side. and when you buying dips, it is the equivalent of trying to short rallies over the last three years and we know how difficult that was. and the bigger picture, the trend is down. if you are talking about worst case scenario, we think the primary breakout from 2000 to 20 on, around 1575 is the worst bear case scenario. again that seems scary but it is only 25% off the highs, well within the confines of normal pullbacks. and another thing we're looking at is the russell 2000. it is down 22% from the highs.

it broke the october 2014 lows. russell has been a leading indicator, when the s&p didn't take out the august lows in september, the russell did. so it is making lower lows. so we think it goes back and retests the 2011 highs around 875. those are the two big charts we're looking here. >> you're calling the russell in terms of testing is firmer than the downside case for the s&p 500 going to 15 -- if that is the leading indicator does 1575 become a more likely scenario or is that a outlier worst case scenario? >> that is the out liar. but if you are talking about 25% in the s&p, it is not that unrealistic to get there. russell, the clear break of the october 2014 lows is significant. you have this clear topping pattern here. so it looks like a clean shot to the russell, down to 870. if that is the case, s&p is probably going lower as well. one other thing we would like to highlight is -- this isn't a market where we want to sell

everybody. we've seen reports out there. i think you have to be in the right stocks. for a lot of investors, they have to choice. so we're looking at high beta relative to low volatility. that is this ratio right here. in 2007 you had a similar break. so the high beta stocks are massively underperforming the low volatility stocks. so if you are looking for a trade, be in the low volatility stocks, that is consumer staples, that is your utilities and avoid the higher beta stocks. >> jonathan, thank you for coming by. from mkm at the smart board for us. dan, jonathan makes the point, some investors don't have a choice. they have to be invested. we have a choice. you have a choice. would you be in a market heading to 1820 at any level even if it is low volatility stocks. >> you have to put some money to work. if you were fortunate enough to time the market and reduce exposure you could be down 20% in the russell and think of a different time horizon with

money always at risk. and my view over the last couple of months is simple. you don't want u.s. multi-nationals. you want to be exposed dollarsly. jonathan said xlu. that is a position i've had long for a while. and i'm long the uup. so i think there is ways -- the dollar etf here. ways to put the money to work with volatility not just being blindly long u.s. stocks. >> if there were a fire sale and everything was 20% off, karen, across the board in stocks. >> some of that has happened already. >> an individual stock. say another 20% from here, what would be on the stop of your shopping list? >> some of the stuff that i already own. something like macy's. it was actually up maybe a penny today. i think it has gotten ridiculously overdone. i think at some point some of the banks, which i'm long, which is absolutely been painful, something like a home depot, down 20%. that i would take a look at.

home depot had a tough day today but it is still phenomenally great over the last couple of years. and it is still down -- at 22 times earnings. if i could buy it at 17 or 18, maybe i would take a look at something like that. to the move of the day. and we're looking at an etf with 1% move in either direction, assets of at least $500 million and it can't be a leveraged etf. so we're looking at the iyt, which is the transportation etf tumbling to a two-year low in today's session. and jonathan was talking about the russell 2000 as an indicator. this is an ultimate theory. >> we've talked about the dow. and if you are looking at the companies that make up the transport index, they are telling you bad things about the u.s. and the global economy for more than a year now and that is reflected in the price. for me, this is not an area to come in and press the short. i think it is a dangerous position. this is the epicenter for the weakness over the last month or so. then it drills down to let's find good companies within

there. but to me, the problem you have is all of the companies in the area should be beneficiaries of lower oil and they haven't benefited so there is story telling over the last year that has not translated well for equity investors. >> well the problem with the beneficiary is that the rails have shipped a lot of oil. it is almost off-set. and then you have to worry in the airline space, if the economy -- the global economy is slowing, then clearly there is too much capacity and prices are coming down. they are not benefiting from the low oil prices. so i agree with dan. don't press the short all the way down but i don't think you try to pick this up at all. and still ahead, the banks this week. who the biggest winner could be. and it is not a name you could expect. and it is not just the banks. one company that the traders bet could have a move tomorrow. we'll tell you what that is right after this break.

if you have medicare parts a and b and want more coverage, guess what? you could apply for a medicare supplement insurance plan whenever you want. no enrollment window. no waiting to apply. that means now may be a great time to shop for an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. medicare doesn't cover everything. and like all standardized medicare supplement insurance plans, these help cover some of what medicare doesn't pay. so don't wait. call now to request your free decision guide. it could help you find the aarp medicare supplement plan

that works for you. these types of plans have no networks, so you get to choose any doctor who accepts medicare patients. rates are competitive, and they're the only plans of their kind endorsed by aarp. remember - these plans let you apply all year round. so call today. because now's the perfect time to learn more. go long. welcome back to "fast money." with earnings season nearly upon us, we're gearing up for the latest from america's big banks. jp morgan, citi, wells fargo set to report this week. but big banks may not be your best bet.

here to discuss this is bob olstein. it is good to have you with us. big banks, the argument is they are cheap. >> they are value investors, we care about free cash flow and we look behind the balance sheet and we need to understand the companies. the nationals -- the multi-nationals are too complex with the derivatives. we are dealing with the citizen financials, the u.s. bank corporation, bank of amerinew y very low risk, low leverage. you take a citizens financial, they have equity which is 15% of total assets. this if he leverage the business model and i don't mean by borrowing money, there is another $1 a share in these companies. we don't know when they are going to move. they are cheap and that is the way we invest. >> so let me just ask you the flip side of that. traditional banking business as opposed to the more complex stuff we talk about for the money center banks, do you find

that they don't have the flexibility in terms of repricing? are they -- are they asset-sensitive or deposit-sensitive, are you able to turn the switch as quicklies you would hope. >> no. they are not going to turn the switch. but if you have earnings share at $2.65 selling at $25, you are going to make your money when somebody turns around and says a private equity guy turns around and said, my god, i'm making 11% free cash flow yields. never before, and i've been in this business 48 years, i'm seeing 11 to 13% free cash flow yields in some of the industrials and it is about value. it is about buying things at the right price. you won't predict -- right now there are segments of the market that there is excesses. whether it is the social networking now or talking about netflix and things. and i congratulate you, you are not ready to step in based on

value. you don't hear that here any more. i'm now extinct. i'm probably called a dinosaur for saying this. i'm very optimistic about what we could buy today, 11, 12, 13% free cash flow. the dillard's and the macy's, one round trip, that was a brilliant move. and what their plan -- their plan is brilliant. and i'm telling you there is a lot of value out there. i'm not predicting when it turns. but when it does, these are the stocks that will move. >> bob, it is great to see you. thank you for coming by with all of these ideas. bob olstein, capital management. this is music to your years. it has been a tough couple of years. >> it has been a tough couple of years for value investing. but i do think that is turning. cash flow is the most important metric that we look at. i do like to hear that. industrials got crushed. i love when those things start to trade at ridiculous levels. i'm optimistic. this is a great market.

not to be already invested in, but to enter. >> to start now. >> you are bearish. but could you see this argument for cherry picking companies with great balance sheets and free cash flow. >> a couple of different things. one, in 2016 there will be a time to buy the banks and that is for dividends. because i think those are relatively safe. number two, when you look over a five-year period you have these periods where value underperforms growth and we've just had that and then it flips. so now if growth, like fang and all of these are starting to crack, value will come in. it takes longer to play out but this is a market where you want to start looking at value. >> banks aren't the only one reporting tomorrow. intel is set to release tomorrow. dan is at the board for tomorrow. >> the q4 report is all about the q1 guidance. they just closed the altera $17 billion deal which gets them away from pc chips which are 50% of the revenues. but the options market is buying

4.5% one-day move the next day. that is more than double the average over the last four quarters. and i want to take this opportunity at the start of earnings season, let's talk about that. we use that term implied move all of the time. the stock was at $32 today. if you bought -- this friday expiration at the money straddle, the call and the put premium at the $32 strike that would cost you about $150 total. that is about 4.5% of the underlying stock price. if you were to buy that and thus the implied move, you would need to move to 33.5 in the upside or 33.5 on the downside just to break even there. so really what we're talking about here is if you are -- you want to be directional, the options would be about half of that move, right. so there is one way to think about it if you are looking to add protection to a long position or speculate to the downside. buying at the money straddles, buying implied proves, long premium option trades are generally losing strategies into events like this. i'm leaning on the short side but with defined risk.

>> pete, i'm curious because it seems like there is optimism around intel. >> feek are folk -- people are focusing more on the pc and less toward the data cloud center. and the deals which is hitting the other stocks. but apple and those type of things. and whether or not these reports on apple, are they real or not. are they struggling in china or doing better? all of that, i think, is built into the whole earnings. that is why we're seeing the volatility we're seeing. we saw upside call buying earlier in the week. the apple 38 calls. so interesting to see what is going on in intel right now. >> check out "options action" at 5:30 eastern time on friday. still ahead, it is a mad rush for the powerball jackpot. so which numbers are your winning bet. you're watching "fast money," on cnbc. first in business worldwide. what are you working on? let me show you. okay.

our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade. iall across the state belthe economy is growing,day. with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in the hudson valley, with world class biotech. and on long island, where great universities are creating next generation technologies. let us help grow your company's tomorrow, today at business.ny.gov

why make trillions when we could make -- billions. >> we're just hours away -- hours from the biggest lottery jackpot in history. $1.5 billion. so we thought we would turn it -- to a statistician, that is

the word, to find out which numbers are drawn the most during powerball. ron wasserstein the executive director of the american statistical association. ron, great to have you with us. >> good evening, melissa. >> so it got harder to win, you say. >> with the picking powerball, it is now harder to win since october. they changed the game structure. and now it is even 67% hard tore win than it used to be. >> wow! so the odds really are stacked against you. in terms of -- >> not that they weren't before. >> in terms of the most commonly-drawn numbers, does that exist? >> you could go to the powerball website and easily see the numbers that occur the most often. and powerball is happy to put the numbers up for two within reason. first of all, they know people want to know. and second of all, that information does nobody any good. >> i want you to explain that.

you are a statistician and the people believe the more tickets you buy the better chance you have to win. pete's daughter at the end bought a bunch of tickets thinking her odds got better because she has more tickets in hand. is that the case? >> well, that is actually true. if you buy more tickets, you increase your chance of winning. let's say, for example, you buy ten tickets. then you went from a 1 in 292 million chance of winning to a ten in 292 million chance of winning. still not very good. >> but better than really lousy. >> slightly increased. >> ron. we're going to leave it there. thanks for joining us. it is great. ron wasserstein. this is the first time we've had a statistician on air. >> we needed it. because karen and i were having a disagreement. >> a lively debate. >> you were wrong. >> but i still -- we still have no chance of winning. >> basically. that is the bottom line. we all won't win.

>> speak for yourself. i bought one ticket. >> but we wish everybody luck. in a little over an hoyer cnbc will -- an air cnbc will air jackpot: the richest lottery ever. and coming up next, traders will tell you what they are watching for tomorrow right after this.

it is time for the final trade. and after such a rough day on the treat we want to see what the traders are watching tomorrow. what is the key to tomorrow's session, pete? >> i think early on, not just the price of oil but the equities out there. we look at the service names today. they were up 2% before oil started to move, they started to fall. something of a leading indicator. keep an eye on that trade tomorrow. >> brian kelly. >> for me it is glenn core. because it is commodities and it trades in london before things get going here. i'm concerned this could fuel the next leg down. if they are downgraded to junk, that is a problem. >> karen? >> the same thing. watching oil. the commodities itself. not so much the price of oil but no, sir it now it is a proxy for global health. >> dan. >> i want to look at the s&p 500. it is the last man standing here so to speak. and when you look at the technicians that identified the

august low of 1867 and the october 2014 low of 1820, let's see how we act there. we're going to get counter trend rallies. you want to see some sport. >> i'm melissa lee, thank you for watching. we'll see you back here tomorrow my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find it. "mad money" starts now. >> hey i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is to educate and coach you through. tweet me @jimcramer. finally at long last we're seeing the wholesale