>> yeah. >> seen conflicting reports on that front. >> it seems like it was okay, but probably not enough to get you to rush to buy retail stocks to be holding through the first quarter. >> and the nvidia story, up ten straight, tripled this year. and then andrew citron's report hits. >> i'm looking forward 20 that. "closing bell" is over. "fast money" begins now. >> "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. your traders are pete najarian, brian kelly, carter worth timothy seymour. the short seller who called the decline in valiant is charting the hottest stock in the s&p. nvidia. the man behind the big call andrew left will be here to tell us why the huge run in this stock is over. plus apple's ceo tim cook making a surprise visit to the new york stock exchange today. we'll hear his comment about why he is calling it a great holiday for am. and we're waiting for president-elect trump to make an economic development.

he sat mar-a-lago, his resort in palm beach, florida. you're looking at a live shot where he is expected to make some remarks about the economy, an announcement that could benefit the american worker. we will bring them to you as soon as we get them. we start twauf markets in an unfamiliar color, red. there was a lot of it today. the dow falling triple-digits for only the second time since the election. both the s&p and nasdaq also lower. the dow and s&p closing on the dedelows. and call it a wall of worry in today's markets. retail stocks falling today, despite our strong holiday season. the transports taking a hit, continuing a downward trend since hitting new highs just this month. and the auto stocks lower as well. are we finally seeing some tracks in the trump trade, or is this an opportunity to buy the dip? tim, what do you say? >> as always, depends on what sectors we're talk about. you talked about the market hasn't had these, it's been october 11th was the last real down day we had. what is wrong with this? i'm not going throw the cliches that side of the desk.

>> buyers. >> i'm kidding, i'm kidding. the smart guys. and the point is it was a very quiet market. i do think it has something to do with it. but of the sectors that broke down today, we talked about this yesterday. i think the transports are the place that actually you may be running into some real difficulty justifying multiples with the exception of the airlines, which i think as the airlines sell off on higher oil prices you buy them because that's higher pricing power for the guys. people want this pullback. this is the one to buy. >> if there are trouble for the transports with the jacket on. >> day two. we went through this yesterday. >> i thought we were going to improve. don't come with your blazer on. >> but there is trouble for the transports. we think there could be trouble for overall markets? >> the issues, whether it was news-related semis or whether it's nothing related transports, these are two of the greatest indicators for equity markets. and they both had horrible days today. and there is this. for the transports, as discussed yesterday, were right back at the former high. and we have been rebuffed. not good action.

we're down almost 5% from the high. it means something. >> i would ride on carter's coattails and talk about the autos, which are kind of a transport too. >> yes. >> but look at what is going on in the auto sector. look at autonation, one of tim's favorite spots, penske auto group, those are down 2% and 3% today. this is when consumer confidence is at all-time highs. so these stocks are telling a very different story than what the sentiment is out there and what the new highs in all the indices are telling. so you have to pay attention to it. i don't think it's time to buy the dip yet. do. >> you guys feel like it's an overread, though? especially when we're looking at the volumes. you talk about quiet. it's beyond quiet right now. >> so you don't want to extrapolate right now? >> i don't know that you can overread this thing. i know we've been very, very slow for a week. and, you know, i was talking about this the earlier today. but 19 million contracts per day the first three weeks of december. and now since that point, 13 million a day.

9 million and 9 million back-to-back. if you look today, how about jpmorgan. you're talking about 50% or less in share volume. it's not just the option world, it's the stock world. it is quiet out there. moving to the downside you would expect the volumes to pick up on a move to the downside like this over 100 points. and there was no volume today. >> there was no volume, but was it any lower than it would this week every year? >> yes, yes, it's extreme. >> lower than last year as a percentage average? >> i would put it as an extreme. when you're under 50% of the volumes you have significantly changed from a three-month average when you're looking at right now. >> okay. so fine. it's a slow week. we understand that. but what's come up? >> the market goes up. there is no volume. it's down and no volume, suddenly, oh. >> but number two, let's look at what is going to happen over the next couple weeks. all right, we turn the calendar. there have been a lot of people who have not sold their stocks this year, they're winners

because they think that next year they're going get a lower tax rate so you have the potential of that selling, that supply coming in. and then we have the inauguration which everybody and their brother tells b.k., we have to wait or to the inauguration and then the real selling begins. i do think there is risk in this market. >> we came in and boom, right? right off the bat. so that's something to be mindful of. >> the last three januarys have been not just bad, but in many cases absolutely horrendous. to make the assumption that january is this period where allocation is actually your friend, it's not. it's definitely not. and if you think about the things that people were focused on last january, it was china, it was the fed, it was global growth. do people feel that much better? the fed is a bigger factor. people are more concerned about china. >> i would say that people feel better, right? >> i think that confidence is better. we spent a lot of time trying to talk about reality versus expectations. and i think if you look at the industrial production numbers around the world, i think they are better.

i think the entire global trajectory are better. i'm not one pooh-poohing the global economy. look where we are year-over-year. look what happened last january and liquidity vacuum. the street doesn't hold positions in a lot of the stuff that is the most illiquid. whether it's high yield, emerging markets, mortgage-backed securities, things that will push the market around even more at a time when the dollar is at 14-year highs. this is a recipe. >> we're talking about dollar rising and that being one of the issues. i think the other thing, when volatility is at this level, we've been talking for a long time. somewhere in the 11s,12. closed underneath that level. it's still low. a 13 volatility right now and you're looking at the s&p 500. when we're pushing 20,000 on the dow. look at the s&p. it pushed up again today at the start of the day, 2271. that's pushing right up against the highs as well. that's why you want to buy protection when you can, not when you have. to you start chasing it, that's going to be the problem. >> what did you do today? >> look at tlt again.

it had a great day. if you're going to get some weakness, you now have people that are net short. the bonds, everybody thinks that rates are going higher. but i think you have an opportunity here over the next couple weeks to be long tlt to play that counter trend rally. >> can i give you a crazy name i bought today? i only did one transaction today. >> one? >> one the entire day. it shows you how slow things are. the push down finally got me back into something you might be interested into wynn. it's bumped up several times now underneath 90, right around $87. they were buying calls. i actually bought the stock itself. that was my one trade. >> the other place are mlps. the energy sector -- >> hold on. let's go to president-elect trump. >> they're bringing them back to the united states. and some other people were very much involved in that. so i want to thank them. and also one web, a new company is going to be hiring 3,000 people. so that's very exciting. so we have a combination of

sprint for 5,000 jobs. and that's coming from all over the world. and they're coming back into the united states, which is a nice change. and also, one web, 3,000 jobs. that's a new company. and it was done through masa, a terrific guy and we appreciate it. okay? >> mr. president-elect, did you speak with president obama today? >> i did, i did. he phoned me. we had a very nice conversation. >> did you bring up any of the concerns about the roadblocks? >> we had a general conversation. i think the secretary's speech really spoke for itself. but we had a very general conversation. very, very nice. appreciated the call. >> you have been critical of the u.n. lately. do you want the united states to leave the u.n.? are you considering that move? >> the u.n. has such tremendous potential. not living up to its potential. there is such tremendous potential. but it is not living up. when you see the united nations solving problems, they don't. they cause problems. so if it lives up to the potential, that's a great thing.

and if it doesn't, it's a waste of time and money. okay. thank you very much. >> that was quite a short announcement. >> wow. >> at mar-a-lago, the president announcing sprint bringing back 5,000 jobs. one web a new company will bring back 3,000 jobs. this had been builded an an announcement on the economy that would benefit the u.s. worker. he outlined 8,000 jobs here in the united states. let's get to john harwood in d.c. for more on this. john? >> melissa, this is clearly pegged to the conversation that the president-elect had this afternoon with marcelo claret, the chief executive of sprint. when sean spicer announced on the transition call that that announcement would be coming in the 4:00 to 5:00 range, it's pretty apparent he had in mind this phone call. don't know how that announcement compares to what sprint was going to do otherwise, whether those were already coming back.

don't know much about one web and the 3,000 jobs that that new company is going to be created. 8,000 jobs is not a huge amount in the context of the u.s. economy, but it's positive nevertheless and will make 8,000 families pretty happy. >> absolutely. john, thank you. john harwood in washington, d.c. for us. you know, it's interesting is that this is a part of a series of announcements where the president-elect is announcing jobs that will either return to the united states, will stay in the united states. >> or have been announced, right? the jobs he is talking about one web were part of softbank's $50 billion or $100 billion fund that they just raised. they already said they were going to be investing money in the u.s. it's positive. i'm happy to have positive workers out there. but i wouldn't make an investment decision based on something that was announced a long time. >> speaking to industrials. much, much more. so the question, does this do anything? no. the burden of proof is that we

get some follow-through on what we swre already seen in the market in the cyclical area. >> if you are an investor in sprint aren't you clad that marcelo claret went to the president-elect and said we're going bring back 5,000 jobs. we're on the radar. >> i'm going jump in on the side of the guys, i think this news is in the market. sprint is up 40% since the elections. >> right. >> ultimately, what i think is the most important thing here is the pivot in asia. mr. trump is a fantastic negotiator. he is basically -- he 8's got a new buddy. this is japan against china there is a lot of stuff going on here. but the asian pivot to me is very important. i think that's a big dynamic right now. and that's good and bad, by the way. if you're an investor in japanese stocks, topix is up 12%. >> pete? >> i look at this, and i know there is a lot different opinions on this whole thing and the 8,000 jobs, were they already set up. probably were. but it's still something that president-elect trump is trying to put in front of all of us

right now something very, very positive. and that's what makes this thing so interesting. it's always going to be coming as a very positive spin from the new president-elect. >> the u.n. >> well, there is some negatives out there in terms of some of the other comments. it's really interesting how there is this spin on how things are going to change. and this is part of his whole thing. it started two years ago in making america great, bringing jobs. >> to that point, when you're an average joe out there. >> you're excited. >> this contributes now to the 15-year high we're seeing in consumer confidence which you had mentioned before, the buoying of the economy for better. >> at least people making investments in their life means buying house, buying cars. but you can't tell me there is not a price to keeping jobs in this country that wouldn't be here otherwise. there is no free lunch. >> you're giving up some sort of competitiveness in the world? >> i'm saying you can't force businesses and companies to do business here if this isn't the best place to do business. now what i think president-elect is doing is setting up an environment where the companies

have other benefits to being here. we know there are many in this country to doing business right here even if the costs are a bit higher there is no free lunch. >> the consumer confidence numbers typically peak late in the sense that housing and autos and all these retailers are seeing a totally different story. >> really spoke for itself. >> okay. >> appreciated that he called. >> we just heard again, just to catch you up to speak, president-elect trump speaking from mar-a-lago. build as an announcement to benefit the american worker. 5,000 jobs being brought back by sprint. 3,000 jobs being create heard in the united states by a new company called one web. coming up one of the hotze stocks this year, nvidia. he'll explain what has them so bearish in an interview. and tim cook taking a holiday vacation and visiting the new york stock exchange. one product that had all of wall

street talk. and timothy seymour over there is stepping up to the plate. he'll give us his fast pitch on his stock pick right now. and says other tradelers be clamoring to jump on board. but will they? much more "fast" still ahead.

it's been a great holiday. air pods have been a great success and we're making them as as fasts we can. >> that's tim cook vacationing in the big apple and taking a tour of the new york stock exchange earlier. cook saying to cnbc's bob pisani that it's been a great holiday for the company and touting the success of its new wireless headphones, the air pods. what do you think? >> i think that mr. cook better hope he sales more than air pods in 2017. this is not a company about airpods. it is a phone company. you can say what you want about the growth of the services. you can say what you want about growth overseas. this company will trade on the refresh cycle coming in 2017 and people's expectations on it. what do you do with it? in 2017, you buy it on the dips as long as the expectations are still there that you have a good refresh cycle coming. >> how about the activation of all mobile, right? all mobile. so we're talking about the tablets and the phone and all the rest of it.

apple right now is 44%. next closest is samsung at 21%. i think that gives you a little bit of a read-through. plus we're talking about the buds. that's just one more piece to the puzzle. you want to throw ice water on top of the thing, 118 earlier and started to fall off with the rest of the market. >> i'm saying i like the stock, but i don't think you buy it -- >> a combination of one more thing that is one more part of this whole thing that causes it to be that much more of a sticky company with a billion plus out there. >> nobody is sticking -- [ overlapping dialog ] >> whoa, whoa, whoa. >> if you think these are anything like the free on the airplane you are sadly mistaken. >> but you're telling me this is going to move -- >> it's one more reason for guys to want to be able to get something they can't produce enough of right now. you do that combination and the record numbers. >> coming up, this will serve you well if the market is going down. >> it's defensive. >> it's defensive. >> right. >> it came off 33% on its lows

from peak to trough. and it's acting well in a relative basis. it's a lower beta kind of thing. it's something you should just have. >> for various reasons, all of you guys like apple. >> right. >> for all the arguing here, yelling here on the desk, brouhaha. >> i'm defending. >> you like apple. >> i'm going pete because i like to. i think pete has generally been constructive on the stock, as i have. i find it interesting when other people, and i don't mean anybody on this desk. people have been pushing around apple for the last six months for lack of innovation. and now suddenly people are cool with the innovation? when in fact there is no innovation. with the value issue, cool with the cash flow, cool with the company that has an install base that is going to continue to grow. that's enough. >> for a guy who has essentially neutral to -- i forget -- >> bearish on apple. but the reason why 2017 is different is because the

expectations for the refresh of the phone, because that's all they do, the phone. >> the iphone 8. all right. >> i credit the buds. >> thanks. amazon up slightly as they name the tech giant to top pick. check out the performance in the past couple of years. in 2015 it was up an impressive 118%. it was down about 22% in 2014. but up 59% and 45% in 2012 and 2013 respectively. so where does amazon go in 2017? tim? >> i think amazon is going to go higher. i think it's consolidated a little bit around the 750, the 770 level. 770 is the support if you're a buyer and want to protect yourself. the thesis for amazon is they're probably going to spend more on their business in 2017. the thesis is the aws becomes more valuable and becomes probably a more dominant part of the business. analysts are having a good time pricing amazon on the sum of the parts business using aws and the core retail and frankly they

probably should. if you look at this on an earnings basis, it's very difficult. i don't want to do anything on amazon. i think there is a lot of great news priced into the stock although i think it will go higher. >> 607 plus cash and 320 on aws for a total of 990 on if price circuit. the key here is data learning. so they can figure out what you need. >> how to target you. how to do all the things that work. >> that giving them a leg up. >> so let's say there were to be an analog. this stock came in on jan 1 of this year and it was down 31% in a matter of hours. i mean, it's not going to hold up well for my kind of trouble. yes, it's got a new mousetrap and it's beating everybody. but it's implied on the street there is no risk. you're talking 48 buys, no sales. it's loved. and loved things have a way of sometimes disappointing. >> that's so sad. >> i know. >> the operating income, i'm sorry. but the operating income, when you really focus on this company, i think you're right.

they're looking at two different pieces, right? but when they look at the ecommerce piece, that's what it is. i think they're looking at aws the way i'm viewing apple or other names as that's where the growth coming from. if that's where the growth coming from, look at the growth presently and what they're going to be able to do off of that. the money they're pushing towards that still. that's the growth engine. and that's why that multiple, even though it's high, a very -- it's not as awful a multiple based upon what they're doing right now at aws. >> then that becomes the risk. if it's an execution risk. we know at some point in time that aws is going to be commoditized. i know it's sticky. i get that. if there is any operational or execution risk around that, then amazon at this price is going to be a problem. i will wait for a close below 750 before i get bearish. >> the thing i get careful about, they're investing in shipping and alexa. that's to stay where they are. may be a problem. still ahead, a classic investment theory could be

pointing to more sell-offs ahead. we'll tell you what it is and why it could impact your portfolio. i'm melissa lee. you're watching "fast money" on cnbc, first in business worldwide. in the meantime, here is what else is coming up on "fast." >> the man who took down valiant is now saying that nvidia, the hottest stock in the s&p is going lower. much lower. so what does he see that others don't? he'll be here. plus tim is serving up the pitch, giving what he says is the hottest stock to own in 2017. the name when "fast money" returns.

i read that today. >> george michael. >> we should do it all week. because that man. >> where were you the first time, brian? t there will sll

t there will sll itomeshen your insurance company says they'll oy pay three-ar of at it takes to acit. at ad too? drive the-quarters of a car? noif youad liberty mual new car replacement™, yod geyour whole car bac i gus they d't wanu iving arndn. yod geyour whart.car bac wi liber mutl car plement, we'll replace the ll lue of your. yod geyour whart.car bac

welcome back to "fast money." a down day for the markets as all the major indices close near session lows. the dow posting only the second triple-digit loss since the election. here is what is coming up in the second half of the show. a classic investment strategy

that has beat 10 market in 10 of the last 15 years is suddenly not working. it could point to more sell-offs like today. we'll explain. and later, our very own timothy seymour says one of this year's laggards could hit it out of the park in 2017. will the other traders agree? questionable. he'll deliver his fast pitch. we'll start wulfe what sent this year's hottest stock tanking. josh lipton is in san francisco with more on this. josh? >> well, that's right, melissa. so it turns out not everyone is a fan of nvidia. short seller citron research tweeting this morning that the market is disregarding headwinds for this company. and that by next year nvidia wi bucks. that stock slipping on the newsg run, surging some 240% this year. that means it isn't just the best performing tech stock in the s&p 500, it's the best performer in the broad gauge,

period. nvidia declining comment on this report. some bulls are not deterred, though, betsy van hees is saying nothing citron saying is new in her opinion, especially remarks about intel's licensing agreement with nvidia which ends this year. saying nvidia management has been saying for some time not to add that into next year's numbers. so the street already factored in that loss, she says. nvidia gets about 66 million a quarter from intel. still, some profit-taking here. maybe not too surprising given that monster run and the fact that nvidia is trading at 58 times earnings. that is more than double its five-year average. melissa, back to you. >> all right, thank you, josh lipton. the man behind the tweet andrew left joins us on the fast line. andrew, thank you so much for phoning in. >> happy anniversary. >> oh, thank you, andrew. very sweet of you to remember. you have liked nvidia stock in the past. you just think the run is a bit overdone at this point, correct?

>> absolutely. i followed the stock for the past year. i admire the company. for anyone who has read my research, i talked about nvidia and what they have done and their dedication to r&d. i thought it's been a terrific company. but when you wake up or see the past few days what has happened, i never thought i would get more people discussing me saying a stock is going to go back to where it was two weeks ago. it's funny when i heard you say before i came on that one of the bulls said oh, don't worry what he said, nothing is changed. i just want to know what has changed in the past two weeks that would add 10, 15, $20 billion on to this company. whatever happened technically this breakout, i'm just saying on november 10th, the company had earnings. let's take goldman sachs, put the price target at 92. boom. the stock goes right past 92. and next thing you know the price target becomes 130. an extra $20 billion. we're still discussing a company as good as they are, they still get the bulk of their revenue

from gaming. when people are look at the blue skies story involved, if you want to say let's say autonomous driving, you're talk less than 10% of their revenues. if you want to talk about the data centers, there is a going to be a lot of competition this the future. you also have the large numbers that are going to grow a lot more in the q1, q2, q 3 that you'll see next year. before you get ahead of yourself and wake up and say maybe i should buy this stock at $119, i just came out and said hey, here are the risks. why can't this stock go back to, and i believe it will, where it was 14 days ago. >> right. 2 irony, andrew of this whole thing is the average price on the street is $93.37. it's not too far from where you're calling it. >> exactly. >> a lot of analysts, the stock has already run beyond where thought it should be. >> i am completely amazed when people e-mail me negative things or bad things. what, when you own a stock, it has to go up at all times every day? it's a market for a reason.

in this particular case, the market got ahead of itself. >> so in this case, andrew, since this is a company that you actually like, you're not calling armageddon on this stock at all in any way, shape or form, when it gets back down to 90, should it stay at 90, right now based on what you know about the business? >> there is still a lot of risks to this business going forward. it's really transferring the revenue from where it is right now, from gaming to more data center. capturing more of the auto market. and it's maint gaming market right now, the performance cpu market. it's going put more pressure on margins. so there is still some questions about this. if you tone stock, the easy money has been made. buying it right here, it's a bit more challenging. and that's why this morning at 119, and even here where it closed the day, i still think the stock goes lower. it's doesn't mean it's not a good company, just not where it is right now. >> why do you think the street was so negative? they had such a visceral

reaction to you saying it should go back down to 90. >> oh my god, people love when stocks go up every day when they own a stock circumstances this a cult stock in your view? has this become a cult stock a la apple back in the heyday? >> no, what's unfortunate, if this is a cult stock, there is a problem. because many times a cult stock is when the actual customer of the stock understands the company. apple. even if you want to say tesla. people really love the product. something like that. what this is becoming is people just whether it be a default plan artificial intelligence and maybe that could be it. but if it's a cult stock, people aren't looking at the revenue mix, unless of course you think that gaming is just the future of everything. >> hey, andrew, it's tim. i guess i agree with you in that let's not get carried away with one stock. my question back to you are there other guys in this space? a rising tide or rising whatever you want to call this, ocean, should be taking other people high like intel or xilinx. who's got relative value here?

>> it's tough. the semiconductor index was up a lot last year, really outperformed the market. it's tough to say if there is anything value right here. you would have to look for actual changes and shifts in technology. i mean, obviously micron would have been wonderful if you want to look at a beaten down name, the opposite of nvidia. it's very tough to find value in the space right now in my opinion from what i know. again, that's just what i'm looking at. i was talking about this particular stock right now is definitely not a value. and i definitely don't want anyone to ever think that this is a pure play on artificial intelligence because it's not. you have to understand who is the competitors are. i think there is a wonderful article in "the new york times" magazine about the future of the ai market. just maybe two weeks ago. and you understand this is not just hands-down nvidia wins and let's take the stock to 150. >> and drew, brian kelly. so i'm curious. you talk about 90 as a price target, but you also mention that normal markets, stocks go up and down. if at 90, that your reason to

get right back in necessarily or -- >> absolutely. a short-term target 90. how about this? i could have said which would have been more tongue-in-cheek, what's changed in two weeks? calm down, everybody. this is not a trump trade. this is not a leveraged company somehow, okay. there is no change. put it back in and let's go back to 90. that's what i could have said. i put it as a short-term market. it's where it was. people can relook at what happens next quarter. okay, look how they grow that data center revenue, see if they can keep the same trajectory before you go ahead and reassess the stock. $90 is still a very high price for the stock. but it's a lot more fair than this morning when you woke up and it was 119. >> so you short right now, andrew? are you short to 90? >> yes. who knows, i'm short to 90. i am short right now. i started to short the stock the past few days. just on the fact of trading. if you want to look at it technically, you can look at the

volume of the stock. more stocks traded today i think than the day of earnings. look at the volume yesterday. it was a typical sign of a high volume, high moves off low tops. i like the tech fundamentally. i think the blue sky story was mistaken. i said hey, is worth me sharing my opinion with people. >> all right. andrew, we're going to leave there it. thank you so much for phoning in. i appreciate it. >> have a great day. bye-bye. >> next, you too. andrew left of citron research. >> something known as a key reversal day which is after a long and steady ascent it starts getting steeper on a day-to-day basis, where you have yet a new high on tend question. that's the case in point you. close on the low. that's the case in point. and volume expands to a record, 57 million. not good action. the question is 90 is about where it gapped up to after that november 10th earnings. if you can overshoot, you can also undershoot. and 90 is not necessarily the floor. it could easily come in higher than that. >> who likes nvidia?

you in it? >> i'm not in it. i think it's interesting to hear this opinion coming from andrew left today. hey, this guy did love this stock. he loved this stock. and it just ran -- far too fast and decided you know what? it's time to wait for a pullback or even better, start to short it because he expects a pullback. >> there is there a pullback you would buy? a pullback to 90? would you buy a pullback to 90? >> i like this company. i think this company if you're looking at it two, three, four years down the road and you look at the ai aspect of it, the potential there, the vr, obviously the grarvphics, i thi it is something you would start debating the buy. it was more about would you rather last night. but if i look at this company, i look at 55 p/e. it's pretty high when you look at the rest of the world. >> andrew brought up something interesting. you to wait for next quarter. you have a high valuation and a stock that everybody is in. 90 isn't necessarily the number. it could get to 90 in two days based on this action. it might take some time to work off this excess and to turn a

bit. so this for me is a name that i put on screen. i watch it and see if it churns for a bit at these levels. then i get more excited. >> i think it's only 10% of the revenues of ai. there has been some very good points made about other people that are in the space too. when i said rising tide taking all boat, even ibm is in this space. intel is in this space and xilinx is in this space. i think you need to look at the guys that have the accelerator infrastructure and the ai and the ar, and you name it. every initial you want. ultimately it get downs to which of these companies are there it's not just these guys. and i think it comes down to multiples. so this makes sense to me. all right. coming up, the dow dogs are losing their bite. the classic investment strategy is suddenly underperforming the broader market. since the election, should you change the way you invest as we head into a trump administration? plus kate spade shares surged today in reports the company could be up for sale that helped one quick trader make ten times his money in just 20 minutes. we'll take you behind the trade that raised a lot of eyebrows

throughout when "fast money" returns. e,n alof this, is the sff tmatters? the syour finces,igh, your future. w du don't.lve thi you partner with a firm that adses gornments and,an diver insight personto p, d the fortune 500, onhat matters toou. moan stanley.

welcome back to "fast money." the trump rally putting the classic dufgs dow theory to the test. bob pisani is more with this.

>> it's a simple strategy, and that's part of the appeal. buy the ten highest yielding stocks attend of each year and hold on to them. it's basically a value strategy. however, the top dogs of the dow by dividend for 2016 were verizon, chevron, caterpillar, ibm and exxonmobil. procter & gamble, walmart, cisco, they rounded out the 2016 list. this strategy typically works because the higher yield often makes the difference. that's one reason it has notably outperformed in the last couple of years. it worked this year for a slightly different reason. the dow is up almost 14%. but the ten dogs, they're up nearly 17%. outperformance. but this is because many investors chased dividend paying stocks to very high levels earlier in the year because many were convinced we were in a low growth era, the so-called new normal. so dividend pair payers wrote would outperform. that's why real estate was a top performer in first of the year.

since the election growth strategy vass outperformed. and out with real estate, out with consumer staple, and in with the banks and industrials. you see the numbers here. most of which ra not high dividend pairs. so the dow of the dogs has underperformed recently. what about 2017? this strategy rotates every year. so for 2017 coca-cola and bow willing be added. walmart and merck will be going out. but remember, interest rates have moved up notably with higher dividend paying stocks would naturally underperform the market. by the way, you can get close to these strategies. yeah, there is an etf for this. don't by the dogs of the dow. the vanguard high defensive yield looks for companies with the highest yield. it's up 17%. it's duplicated the dogs of the dow. and it includes all the dogs, verizons and chevron and exxon. by the way, the yields are

generally lower because the prices have gone up so much. >> let's trade this strategy. >> it's probably something worth adding there is a seasonality to the dogs of the dow theory. so we know that long-term it's crushed the market. if you were to take 1990 to present, 100,000 in the s&p is now 700,000. $100,000 in the dufgs dow is now 2.3 million. a blowout. but here is the thing. q4 the dogs of the dow typically underperform. you can say it's trump post election. there is a seasonality now. >> you think it's a good strategy? >> long-term tells us it is. and it's outperforming this year. >> i think the reinvestment of the dogs of the dow is an important thing. if you're looking for yields, i think mlps is where you want to be. the energy sector going to continue to outperform. but this is a place where people had yields and there are yields now. the 10%. they're going to come into four or five which is a long-term range. this is the place you're going to get outperformance in the same conservatism that people are looking for in the same stocks. >> it's no different than we talk about.

you look at nvidia, right? that's a name that is straight up. the dogs of the dow are the ones that are straight down. it's no different than a high/low strategy. everything everybody ever says to do, you buy the stuff that are out of favor and they come into favor and you do much better than anybody else. >> you i like any of the dogs, pete? >> i like some of them. and i own some of those. but timmy's point, i've been in kinder morgan for a while. you look at growth, you look at yield, you look at earnings, and those are what you look at. many of the names we're talking about fall into the category of what you like there are other names out there as well and i think that's where the expansion really comes. let's move on to big news. shares of kate spade soaring more than 20% after parts of the company looking to sell itself. that made one options trader particularly happen. mike khouw joins us. hey, mike there. >> may have been more than one options trader who is very happy with the action we saw.

and there was quite a lot of it. pete was talking about we haven't seen that much options activity this week. in kate spade we saw more than five times the daily average volume by about midday today. and one of the early trades we saw, around 1222, someone paid 20 cents for 2,000 of the january 17 calls. now very shortly thereafter, the stock really took off and was up nearly 10%. but if you had bought those calls, as this one did, you did much, much better. those went as high as $2, ten times your money, or $360,000 in profits in 18 minutes. not too bad. but here is the interesting thing that i think viewers ought to think about. there actually was a bit of time between when this trade took place and when the stock really took off. which means that sometimes looking for this unusual activity might be a good way to see that news might be coming down the pike, as it was in this case. >> all right. you know, it's funny. the other handbag makers out there also got a little bit of a lift on the news that kate spade is shopping itself around so to speak. >> the interesting thing, mike

points this out. this is why and when options can really be incredible. because the limited risk. you jump into something like michael is talking about, a 40 cent option that goes to $2. well, the beauty of that is your full risk was 40 cents. if somehow the news came out and it turned into something much more negative than expect, suddenly this market starts to turn, if you're long the stock, you have a real problem. you don't have that unlimited -- the limited side of wit the option. >> once that option goes up to $2 -- >> get out. take your profits and leave and go somewhere else, right, mike? >> and jump on the coattails, right? >> this would definitely be one of those situations where if you had the opportunity you probably should have taken out. you were talking about the 16s. those traded 40 cents. the 17, somebody bought 2,000 of those for 20 cents just about two minutes before the 16s traded. those ones were ten times your money in 18 minutes. and they did trade as high as $2. and you probably could have gotten out in the mid 150, 160 range. >> how great is that? >> money in the bag, literally.

thanks, mike, mike khouw in austin. check out friday 5:30 eastern time on cnbc. still ahead, home builder stocks have sold off in the last week, down more than 2%. but timmy over here says one name is going to step up to the plate in the new year. he is over warming up for his fast pitch. you're watching "fast money" on cnbc, first in business worldwide. hegary, wh aru doing? oh hso wcashe our azing trading connecting our brains th's areat idea, t why don't you st gtog trading connthinkowis chat rooms ere u can are strategies, ideas, even actual trades th markepressionals d sands o? ow. yourmmm, ber?y bra before you tolmyace. taponly atd aritrade.ttraders .

won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan. no, i picked the wrong insurance company. with liberty mutual new car replacement™, you won't have to worry about replacing your car because you'll get the full value back including depreciation. and if you have more than one liberty mutual policy, you qualify for a multi-policy discount, saving you money on your car and home coverage. call for a free quote today. liberty stands with you™. liberty mutual insurance. anything with a screen is a tv. stream 130 live channels. plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline.

only xfinity gives you more to stream to any screen. download the xfinity tv app today. check out shares of nvidia in the after market session. at session lows down by 1.1%. this of course after eastbound conversation with short seller andrew left of citron research. he is saying that nvidia is worth 90 bucks a share. he said short a couple of days ago, it is short right now. we're seeing now down by 1.2%. let's shift gears here. time for the fast pitch. that's where one of the traders pitches a stock they think is a buy and the rest of the desk weighs in on whether they're buying or selling the stock. timothy seymour, take it away, tim. >> thanks, mel. it's a baseball show. i would argue we're in the bottom of the third ining for the housing market. i want to talk a little bit about the fundamentals. first of all that will drive home ownership. consumer confidence we know we're at 15-year highs.

we're also in a place with the housing market where inventories are around 5.1 months which is 20% below the long-term average. home ownership is at a five decade low. we're at a place where there is a lot of back or tailwind for the housing market. banks who are seeing a steeper yield curve are more incented to lend and give mortgages than ever. and i think they will do. pulte has been in a low growth conservative. they've been pitching a defense essentially. now it's time to hit the ball out of the park for these guys. they're going to start to increase sales. they've been accentuating a tremendous balance sheet which means stock buybacks. i think it's going to be done in a tremendous fashion. and ultimately, this is a stock that is cheap to its pierce. it trades 15% cheap to the other big cap housing plays. pulte to me, i look at the chart at a time when a lot of stocks are getting away from you this. stock is trading around 20 bucks and has been. it's been convalescing at this level for the last two years. i would make a argument there has been a lot of confidence in

the sector and this is a case where you want to start to fade into housing stocks as the cycle really just starts to take off. take a look at this one. valuation, free cash flow, 2% dividend yield. it's been out of favor, and i think it's a nice time to buy. this. >> whose got a question for tim? >> b.k. does. >> all right, b.k. >> timmy, the obvious question, you're saying we are having just the start of the cycle in the housing area, yet everybody in his brother is talking about higher interest rates. higher interest rates are not going to be good for home sales, right? >> although historically a ten-year mortgage at 3.5 right now which is where it has moved after it moved 75 basis points is still ridiculously cheap. i recognize that ownership has been a function of affordability. i think that's changing. i think somebody like pulte is actually now targeting more of that lower income buyer. thing is a great time. i actually think rates are still historically low. >> who else has a question? >> here is the deal. could you have picked another one, like lennar or tolle?

is there something specifically about pulte? >> i think it's third inning, carter. but pulte first of all because this company is probably the best balance sheet and they were playing more defense. they were doing share buybacks. they were doing things to their inventory and things to their business model which meant they weren't going after volume growth, they were going after margin growth. i think this company is cheap to the peer. if you want to do a relative value trade, you do it against one of the peers. it's company and sector. >> let's see which guys are buying or selling. pete najarian, what do you say? >> timmy, i got to like timmy back. but it's not just because of that what i like about it -- i'm actually in beezer right now. what i wrote down you talked about some of the cash values and the yield. you look at all those, and i agree with you. as we start moving down, the environment gets better and better and better i think for housing. >> so you got one buyer, timmy. b.k.? >> b.k. says meh. for me sell it.

the reason it's an interest trade for me. >> i we know where this one is going now. turkey, me, it's an interesting rate trade. and i'd rather trade bonds than trade houses which are just giant bonds. >> okay. >> you're safe. not because i have anything. i was just judging your screen performance. out of a 10. >> that's very good. >> appreciate that. >> and you got one buy and one sell. >> look -- >> no judgment? >> i don't think housing is going to do well in this environment or perspective rate environment. >> the only guy that said liked your blazer yesterday. >> 9.8. now that 0.2, you're working on it. >> we'll working on it. we'll get there. stale ahead, carter is looking at one sector he says could see a massive reversal in the new year. we'll find out what it is, when we return. k and thousandof miles away. with the help of at&t, red bull racing can share critical information out every

inchf the car from virtu anywhe. es are getti warm. confird, daniel you need to cool yr ak. understood, brake bias back clicks. gbecausno one knows & likee spat&tision. this is my retirement. retiring rired tes and i never get tired t. plan your never tiring retiring tired tires retirement are you tire prepared to reti? 'in vestsnd as a vestnvestor in vests i inv*, wherinvestors n investige and inst in vest or in vest sign up attrade.com and t up to six hundred dollars.

you have to stop thinking of the stock market as some kind of unified whole. start viewing it as stocks. because the stocks that are leading the charge higher are a lot less vulnerable than many people think. before we go, we want to acknowledge it is a very sad day here in "fast money." after ten loyal years, we're saying goodbye to our trusted desk. it has been with us since the very beginning. so take a look. take a moment of silence as we remember all the times we've shared. may it rest in peace. >> a sledgehammer. >> a sledge, it's all coming down.

>> final trade. >> still doing final trade? >> we don't have a lot of trade. >> all right. goodbye, desk. see you back tomorrow at 5:00 for a ♪ 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, and 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 not just to entertain you but to educate you. so call me at 1-800-743-cnbc or tweet me @jimcramer. close watchers of "mad money" know i'm not a chartist, but i do play one on tv weekly. showing you technology patterns that predi