we are back and joined by a special guest. the one and only guy adami. here is what's coming up on the show. i'm mad as hell and i'm not going take this anymore. >> that's one one of our traders is saying about the health carouseloff this week. and he'll tell ewe why now could be the perfect time to get back in. plus -- that pretty much sums up the move in bonds today after janet yellen hinted at a september rate hike. we'll tell you how much worse it could get and -- ♪ jump around

retail stocks have been all over the place this month. and brace yourself. because our resident chart master says the space could be in for even more volatility. the action begins now. >> as the market has called to new highs, investors have been running out of the so-called safety trades. utilities down 5 and 6%. with the possibility of a september hike on the table, could it be time to get back into these so-called safe haven assets? mike? >> well, not all of these are created equal, so some of the places where people have typically run for safety including consumer staple stocks and things like utilities, valuations are looking rich even at the current level, but there are places where they don't and you were talking about telecom. this is an area where yields are high, but the valuations

are not extraordinarily high. that's what the high dividend yields are telling you, investors are skittish. if your attitude is that you should be greedy when others are fearful. maybe this is in fact the time to step in. >> telecom, the sector, is really two stocks? >> effectively. almost all of them have that issue. if you think exxon and chevron, youbsly teleco. >> i think verizon and at&t were two stocks that traded sideways. over the last six months, we have seen both stocks run up to all time highs on little or no news. the only news was interest rates were going lower. search for yield. obviously they backed up a little bit. i would submit the valuation, maybe not that rich, but it's not cheap other, so i think there's more room on downside. i'm still a bond bull by the

way, but i think the market will shoot first and ask questions later. >> if you were a bond bull, how can you not like stocks that are yielding more than the bond markets are? and as far as how expensive they are, i'm trying to figure out what expensive is. with the bond market trading 18 times, probably going earn four bucks in eps. >> historically speak, i think they are expensive. given the norm for the stocks over the past ten, 15 years. i am a bond bull, but i don't think the rest of the world is is, so why i think they're going down is because the world is bearish bonds, thinks rates is going higher. >> they're not vulnerable to a strength in the dollar where >> i think a lot of people would give up toilet paper before their cell phone. you think staples are a safe place to be, try to rip that phone out of your teenager's

hand, by the way. >> by the way, not me. >> me neither. >> you have a trade in verizon. >> you can buy the november 52.5 a calls and spend just over a dollar for that. you're spending somewhere in the neighborhood of 2% of the current price that's going to be profitable if the stock even moves marginally through that stip. if guy is right, if the stock pulls back, it puts typically trades at big premiums. you can have an opportunity potentially to sell a downside put for as much you spent for that call, maybe more. so you have an opportunity here to risk little to make it if it does continue higher but, if it doesn't, you have ways to play around it. >> let's get the technical analysis for verizon. >> looks great. there's two kinds of weaknesses. weakness to take advantage of and weakness to stay away from. >> just to put in context, we know there's in hyper rotation.

we know money has come out of these so-called high yielding. verizon down 5.8% over the past month. utilities down 5.1, teleco down 5.5. staples, bonds and then the market. you could draw your lines anywhere you want. we have a 10% correction, from 57 to 52, the first thing that my eye sees is this. again, could draw your lines where ever you want. to my eye, that looks like a good trend line. you can also draw a line like this, essentially along the tops. so we've had something of a pullback to a level where rebound potential is high. we have down to traend line, a 10% correction. i think this is a good time to take advantage. if you've got a yield versus a

ten-year of 1.6. just to put that into context, that's 2.7 times that of the tee bond and look at this relative dividend yield. it's not the absolute yield. it's relative to ten-year treasuries. you're trading almost three times that and this dividend. they pay out 225, they make four. well covered. so, to my eye, i think you make a bet here that verizon is a play for a bounce. >> last quick word, mike, on this trade. >> i think he hit on the most critical issue. a lot of areas where you have high dividends, they're leveraging the balance sheets to continue to cover them. that's not true. if anyone makes a chase back for yield, that's the place to do it. >> let's get to a big mover. health care. the xlv health care etf dropping 2% and seeing more than five times the average daily put volume over mylan's dramatic price increases on its epipen. health care is now the second worst performing ser tor behind financial, but could a recent sell off present a buying

opportunity. mike, you see value? >> i actually saw value in the health care space before this blew up. this is one of the weakest performing sectors we've had all year and some of the cheapest stocks. the situation with mylan is a tough one. they have $10 billion in revenues, about 10% from their epipen sales and a much larger percentage of their profit. cvs is still quite cheap. i don't think these companies deserve the kind of punishment they've received. a name like cvs is relatively cheap and took it on the chin, express scripts, there's two issues there. we highlighted some of the put issues there. you know, i don't think everything needs to be taken to the wood shed on this. >> we're dealing in an environment where fundamentals

aren't the driving factor. >> this is not a fast money comment, but if you have time horry zen, they'll get through this. they'll figure this out. maybe they haven't done everything correctly, but mylan will get through this. quickly though, the one place i would go to for value is the bio tech index. 285 has been a pivot for months and if you look at where it closed today at 285, i think the risk reward sets up well on the long side. >> one we know it's parking lot of the rotation out of sort of safety, so it's being caught nup the teleco, but recent head license. hillary tweeted, it's under pressure, but ultimately, it gets down to whether one believes this is appeared to be aggressive with equities or cautious and i think this is a heads you win, tails you win kind of proposition.

health care will go down less if the market continues lower and if it's going to gain traction, this is a good a place to be as in. >> mylan is not trading eight times forward earnings is not really happening. even if they do it early, the $660 million, that's not going to happen. there are names that don't have the same sensitivity and it's not a situation where you're taking an old product and marking it up. they're trying to develop new things. i think that's obviously a safer place. cvs is not in that same business. >> you don't think congress is going to shine the light on every part of the supply chain? we talked to senator richard blumenthal who said he was going to look at it. we talked to chuck glas grassley. he said he's going to look at it. >> the whole reason they're able to charge $608 for two epipens is because they have patent

protection -- >> i'm not talking reason, mike. i'm talking washington! >> the reason why washington never happens in washington on this specific issue is because if they had to take a look at it, there would be -- >> are they going to get their trades off first which they're allowed to do and then go and do their voting. the whole thing is preposterous. >> talk about ultimate skepticism. got a question, send us a tweet and check out our website. we have the hottest options news, videos throughout the week and exclusive trades. check out our super cool newsletter. we have over 100,000 subscribers. what are you waiting for? here is what's coming up next ♪ >> that's what investors have been asking about, interest rates. the answer might not be what you think. we'll explain. investors have been flooding the a number of retail stocks this month. so why is the space still underperforming in the market?

>> i don't know. it's a mystery. >> not exactly. and we'll explain it to you when options action returns. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, 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.

oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. welcome back, i'm dominic chu. we're winding down. it's fair to say the pictures has been pretty mixed with our fair share of standout upside and downside performers.

over the last month the consumer discretionary sector has been a relative underperformer and the same can be said of real tail names outside the large cap world. if you look at the swieder, srt, it tracks a wide part of the industry from small to mid to large cap stocks. we took a look at index members that have made large up side or downside moves in the shorter term. there's nearly 100 names in the index. some have rallied so strongly that they're now around 20% or more above their average price over the last 50 days. those names include best buy, groupon and urbn outfitters to name a few. on the flip side, there are some stocks in the xrt that are well below their prices, they include dollar general, gnc holdings and hsn. so the question now is whether there's at least a shorter-term trade on a reversal of these trends or is the momentum sustainable. remember, we get another notable report out of lululemon next

week. melissa, we still have to keep an eye on retail earnings a little bit longer. >> thanks, dom. despite big moves, carter says there could be trouble ahead for the retail sector. what are you seeing, cart ir? >> a perfect setup. almost schizophrenic moves. typically the ones that have come to life have been laggers or losers. we have hyper rotation within the sector and no progress. similar to what he was doing, take a look at some of these names and look how big, nordstrom up 17. tiffany, 15, 16. temper ped dick, guess, urban. big, big moves. with that help, still not moving. xrt in particular not progressing. i want to set it up with the overall sector, the xly. what we know is we got just to a slight new high and we're struggling. as that's happening, one can say, yes, i did well, i made money. but at a professional level, if

you will, or if you're running a fund, it's a disaster of a pick. up half as much as a market. this relative performance is a big problem. so up on absolute basis, but up kpshlly less than the market, the xly, the whole sector. a sub sector within that, here is xrt. in fact, the etf dom was talking about. 96 components, equal weight. onlyson, walmart, the whole thing. we know consumer discretion is underperforming the market and xrt is underperforming the consumer discretionary. that's after best buy and tiffany gapping up and producing points, but not moving the aggregate. so long-term chart, you can draw the lines however you want. the first thing i thought jumped out was this, a clear trend line. we've responded to it beautifully. we've responded to it and we underskut it and we try to get back and we failed. now we're struggling onto the trend line. i think that's what's going to

happen. you can draw your lines this way for those who want to name their patterns. so where to? here is your sort of here and now chart. i think you're going to basically fail. you're stuck in all this, and then it's going to basically break this trend and head lower. whether you look at it in the short term or the long term, not good action, not good relative action and we've had a lot of contributing strength and it still hasn't helped the story. >> mike, you've got a trade. you also see it going lower. >> here is the thing. look at the names in the space. basically the thing that has propelled most of them higher, it's not nearly as bad as we thought it was going to be which is a different thing. the only good news i thought in the best buy story, store sales hung in there. the 20% online sales growth the meaningful piece, but it's not that meaningful when you consider ultimately they're still competing with the amazons of the world. the situation is how much of their revenues are still coming from online? the growth is not necessarily

enough to make up. it's got to make up everything they're doing basically before they become on online showroom. i think that's definitely a problem. the same is true for everything else in retail, whether you're macy's or nordstrom's or tiffanys, you face the sek same secular trends. dom was mentioning lulu. i use my holly example. i haven't been seeing that on the credit card receipts lately, maybe that one, the one that met my holly index, even that one, i'm wondering. it's trading close to the all-time highs. >> what's on the holly index now? is that the next great trade? >> juiceland and starbucks are on there. >> holly is more than capable of having her own cards and paying her own bills. i know she's watching at home. >> questionable. >> december, 45 putts, you can spend about 1.90. that's not that cheap when you

take a look at it relative to the cost of xrt right here. it isn't that bad when you think about how volatility is priced generally. here is the thing, if it does pull back, you'll have an opportunity to try to look to spread this. that's exactly what i intend to do. we've got a little time for this to play out. people will start get an indication of how holiday sales are going as well as lulu's earnings. >> how does seasonality factor into xrt in general? >> i don't do a lot of work in seasonality. people do it with gasoline and summer driving and consumer and tax receipts and whether you get the credit. the reality is that should all be synthesized in the chart. i think it is. what we know is we've heard from this area, this is so-called peak employment. everything is good and the stocks as an aggregate aren't acting that well. >> what's on the guy index? >> i'll tell you what's on my index. i was at short hill mall, walked by saks fifth avenue, and

they're closing the store. madness. you clearly don't care. >> i don't go to short hills. >> we went together. remember we went? >> cheesecake factory, tesla, macy's. >> you don't remember. can i get granular? dollar gen, stock got hammered, probably correctly so. i'll say this. go back to may and look where the stock took off from, $75 took off like a jet to the upsi upside. yes inventories are up 8% year over year and you don't have a commensurate sales growth to match that, but you may have valuation in your factor and may have activists starting to get in. a lot of analysts took their numbers down. look at the price target still. even though everybody took them down, still 10% higher than the stock is. 75 bucks where it closed to day. a good trade. bonds tumbling after janet yellen said the case for a rate hike is getting starter.

that doesn't bode well for collin. we'll tell you why after the break. 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.

oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. welcome back. time for total recall where we

take a look back at open trades. last month carter thought bonds were about to break out. take a listen. >> the key is you broke out and you check back. a check-back like that is excellent. you want to play tlt for new highs. >> i think the way to do this is buying the october 140, 150 call spread. you can spend $2.85 for that. >> the tlt tumbling after janet yellen hinted we will see a rate hike this year after all. carter, what do you see? >> we have the check back and the balance. with today's news, it's back a little below where we started. i will tell you to stay with this. in my estimation, i don't think rates are going higher. we'll take it down the road. >> one of the things we did when we put this trade on, we had our eye on a september meeting which is one of the reasons we looked out to the october expiration. we're down about a buck on this trade. call spreads in the $1.70 range. that's a pretty cheap bet and the chance that something doesn't happen in september. if it doesn't happen in september, we get any other

negative news or we get a bad jobs report, what's going to happen to this? it's going to go higher, probably sharply higher. you're only risking 1% of tlt to make the bet. >> tlt price action was miserable, basically closed on the low. that's not a good sign. i agree with both of these guy, even if the fed does raise rates, they control the front end of the curve, not the back end. i think the market controls it. i think people are making a mistake to sell bonds. i think the economies globally are still weak. i still think you'll see people look for a yield in the form of bonds. i think tlt goes higher. >> the real tell is how the bank acts. i think the rate environment is pricing in probably not a lot of movement from here, and this is an asymmetrical war. it's not going to go much lower. >> up next, your tweets and the final call from the options bits. i'm here at the td ameritrade trader offices.

steve, other than making me move stuff, 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.

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a oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

you tweeted and we heard you, specifically from evansville, metro asks bank of america stock price breaking out. what are options telling the traders? >> they are telling us bac is going higher, about 400,000 calls traded today, mostly expiring within the next three weeks. the top ten most active options were seeing call buying. looking at a short-term move to the upside. >> what do you see in the charts? >> probably one of the best performing of large cap financials, better than goldman, better than citi. i would agree. >> let's get to this, keeping it short, gld or gdx. maybe neither, maybe give silver a nod? >> silver is good. i'd still go with gdx. i understand gold has been beat up. >> last word, chris carter? >> get along verizon for a nice bounce here and want to be short

the other side. >> november? >> november calls, verizon. >> thank you for having me back. dan nathan will be back in his seat next week. >> our time has expired. see you back here next friday at 5:30 eastern. meantime, "mad money" starts right now. [ female announcer ] the following is a paid presentation for the keranique hair regrowth system, brought to you by keranique, the women's hair-growth experts. there's a problem shared by over 56 million women. it's like this taboo subject that we all want to pretend isn't really there. it's -- it's embarrassing. you know, if you don't talk about it, maybe it's not happening. [ female announcer ] women with this problem feel embarrassed, frustrated, and alone. like, even with a close girlfriend, i'm embarrassed to talk about that. [ female announcer ] the condition is female hair loss.