be the headline. down 611 on the dow closing up 260 in the last hour and 20 minutes. >> we'll see if there is confirmation the first back to back gain of the s&p fieftd still an awful month for stocks we'll see if we can get more buying in tomorrow. >> cnbc special 6:00 p.m. eastern time before that, "fast money" which starts now >> reporter: "fast money" starts right now live from the nasdaq market site over looking new york city's times square i'm melissa lie. tonight lineup brian kelli cart are wirth steve grasso we start with the come back, a 900 point swing. the dow selling off at the open with losses accelerating throughout the day down more than 600 points at the lows of session but in the final hour the buyers stepped in and kwikd wiped out loss as down some the dow ending up more than 250 points are the buyers back in between yesterday's big rally and today's bill comeback?

is it safe to get back into the market. >> steve when you say safe? i'm done picking this market out for two to three week inincrements i want to pick it out in two to three days, or hours it's safe to buy the market into year end is that okay. >> all right. >> we'll start there i think you have pension fund rebound for the mechanic place that comes in the next couple days but vukd a sell given maybe the first two weeks of january so be careful. trade it. >> you can't call for the -- making a call for the next two days trading we have here. >> i think -- i think you could have it -- >> i think you could have this market rally in three days 10%. >> ten%. >> is that a fair call. >> if we. >> it's up, down. >> then let's buy and old from '09 never talk about levels or talk about it at all i called it from a sell from 1940 down to the lows we had this week. now i'm saying buy.

>> buying into year end two trading days the question embedded in my question is what -- what did we see a bottom is this bottoming. >> there is nothing safe about this extraordinary volatility. this is not what makes sort of a median average smart market market want to run in. in typically makes people back away from the asset class and not embrace it. >> i don't know. listen this game is about risk reward and i know exactly my risk i nope that yesterday's low is my stop outpoint we have had tremendous price action here. today the fact that it snapped back after what was really bad news, so bad news, good price action, we have pension rebalancing. we got a lot of things here that i don't know- -- safe is a strong word. >> right. >> >> but i'll tell. >> you close to a bottom. >> this is an excellent risk rereward place to get in. >> the yesterday's lows 2240ish

we have the seasonal effect not just pension rebalancing maybe santa clause maybe santa clause showing up finally. >> i think it's a great opportunity especially if you are a long-term investor there are so many great stocks on sale. down 20, 30% from the highs. i don't know that we're definitely at a bottom right now but looking at the risk reward tradeoff i like it at this point. >> my problem was saying that some stocks on sale, 20, 30% off highs we could have said that a while ago for a number of stocks there was more downside. >> that's why the price action was important. because you can say nowivive o we have evidence that the character of the market has change when bad news comes out the market goes up that to me is one step we never have -- we have this new info. >> we stopped 20% basically from highs to lows. that's what everyone sets algorithms to. they wanted the 20% from the recent historic highs down to the 2350 level in the s&p.

that's where we stopped on a dime we are closer to the bottom than the top right now. >> what has changed. >> what about the russell down 27%. the russell 2000 or dow jones just because it's the s&p there is another magic about 20%, 5 or 0. >> it's only magical because they program the algorithms and it's electronic driven when you watch this as home, i think we are close, maybe 5% from the ultimate bottom where stocks stop. >> here is the stance. 1927 to present look at the last calendar week of the year the average gain is 4.8% it's a big week. now we're not having a big week yet. maybe we recovered from a bad start. but it would have to do something special the next two days to be in line with what should be a good period. >> the fact we started off down so significantly today and continued to move downward and suddenly saw the great reversal to me means that possibly this could be the beginning of change

in investor sentiment. >> listen, you asked what change, though, there has been a bit of change. number one we were concerned about powell losing his job. >> okay. >> it appears he has a job for 90 days. >> they stay a hundred percent. >> for 90 days we heard that before the fed walked back the hawkish tone they had a communication problem day after they were on steve liesman talking about how they care about the stock market that out of the way some movement on tariffs and then probably closer to the end of the government shutdown rather than the beginning. you take all the market worries away that's a changed sentiment in the market. >> but the problem is i don't think any of them are away because even if powell stops raising you got the delefrpg of the balance sheet. you have that tightening effect. >> what's wrong with a reset of this magnitude nothing it's normative we will look at this later how many 20% declines there have

been then this. let's say we never go a day lower how long does it take to recover getting back to the highs? a long time? once you have damage down you don't get out easily. >> immediate think just one last thing in my mind how the calculus change. b.k. mentioned the fed at 2940 in the s&p we had the fed -- now we have the fed tightening whether tightening or not tightening it's the deleverage is tightening. you have still global growth shrinking and divided government there is not going to be unbridles pro-growth, deregulatory environment anymore. you don't get back to 2940 >> we've also earnings season around the corner at this point with full-year outlooks which may not necessarily be -- we may think those have change. but have they changed enough for companies to say 2019 looks good i doubt it. >> they don't have to say it the bar is so low at this point. 20% off the highs the bar is low for the companies. unless you think there is a full on recession coming, which i don't see at this point in time, i can make a case for --

>> there are no indicators saying there is a full on rezbleegs what do fedex say about a recession. >> it's a warning sign but that's priced in the stock market we have gone down -- >> it's not if we are having going to have a recession the problem is timing the market i think consumer confidence tells us they don't believe that low employment is staying there. >> closer to the bottom then not. what's on the buy list. >> i would buy the things that probably got hit hardest those will be the large cap tech stocks because that's growth >> such as. >> so i would get back in buy the netflix. back in and buy amazon i wouldn't buy facebook that's a privacy issue. google i like but still a privacy issue there as well. apple on the fence i still own it but i still think that the best days for apple are probably over. >> what's on the boy list or what would you buy right now. >> i agree with steve i like the fangs. but i also think you need to begin looking at company that is do well when the economy begins to deaccelerate.

think companies like waste management because there is always going to be garbage think companies like dollar general because you are seeing increased store traffic as the economy slows. those are the companies we are looking at right now. >> well we're talking about banks later i think so right now i'll talk about more u.s. cent rick companies look at the russell. >> you'd be a buyer of small caps. >> buyer of small caps here. and the reason why if you look around the world everything else is slowing undeniably the u.s. is growing. maybe slowing growth but you want to be focusesed on what's going to work. buy the russ zblool the real risk is that there are more money coming out of the supercap that are widely owned and the russing down as much as it is now almost 30% it's a catch-up trade here relative to the supercap names that are still beloved and in many ways people have not abandoned them the way they typically do when things are are sort of -- >> the issue we have with small caps is the debt levels are too

high we feel like at this stage of the game late cycle we are focuseding on the companies that have lower debt levels the russell unfortunately just doesn't fit the parameters we are looking for. >> mark yusk o trots out the chart saying a third of the companies in small cap index are zombie companies they don't have enough to three year to cover debt payments. >> i'm not in small caps for three years. i'm a trader i'm in the moving business near. i move stocks in and out not in the storage business piem saying as a rebound you get lower rates, that's helping the debt levels. you get any time much rebound in the economy that's going to help the debt levels. but bottom line is something that's down 30% i trade it. >> three of you were bullish if you believe market go higher you want to play the smaller cap for a rebound. >> even the bear likes the smaller cap names. >> sure. because from my case it's a spread over the large. >> right. >> despite the reversal our chart master here carter says the worst is yet to come you gleaned that from commentary

make your way to the chart. >> are we just going to skip away with a 20% selloff? ounds like a lot but is it. >> remove my opinion, everybody else's and look at the numbers how many 20% plus selloffs have there been where it draws down as was this time more than 20% from the absolute peak to the low point? there were 32 since 1927 moving forward and talk about the 32 so the mean decline is 31% the median decline is 28 does it mean we have to match those? some have been 20 or 21, 22 and have stopped but again if you were to take all of them it would imply that if we were to long that there is more let's talk about the duration. of the 32, 20% plus selloffs the median is three. the this is three and a half months we are only three and a half perhaps maybe a month 1/2.

i think january could be very, very bad which would set up for the 4.6. okay now, forget about the downside let's say the guys are right and it never goes lower. how long does it take to recover? that's the issue of the 32, 20% plus selloffs the meantime to recoup losses big bold is 4 years seven months the median times is two years. some some recover in seven months some or 14. very rarely do you dust it off the point is damage has been done and interesting it happened from an instance when everyone was bullish at the wrong time in october for a praekout. >> carter why don't you come back over to the desk because it would be very awkward to have the empty chair here so the bottom line here is as much as people might want to believe that these past two days mark a bottom or recovery it will take years even if it were

true it will take years to actually. >> i would say it's at least a year, now, again, median and mean, mean helps to adjust for skew of big periods where it's down four and five years but think about anything if you have a little trouble you get out of if you get hurt, blow out your knee you don't krofrp quickly you do rehab or maybe knee replacement. the point is damage has been done the hole is in the bow you have to bail. >> i agree damage. >> there is people thinking we have a rally christmas rally go on to new highs. >> we have been in this business so long that when we start to look at how quick the markets change, today, the last couple of days this year, things are fast forwarding. so that four years where you look at that, could be four months could be four weeks. they change differently. the pace is it totally different. >> this compute computerized trading algos kicking in exacerbating the moves up and down. >> they all go with the same

levels. >> rates peaked at 330 s&p peaked at 2940 and crude adequately peaked and all collapsed simultaneously is that bullish osh something to be worried about i think it's -- >> i don't disagree. i think eventually we're going to erase the whole -- ironically nuch it will be the erasing of the whole trump rally. because i think that's where we're headed that's around 2075 in the s&p spo ultimately if things go on this same path you would have to erase if that is instilled in the market any longer if all the bullish things are not there they have to be erased >> or could this be 2011 i mean in terms -- in terms of the 20% draw downs i don't know if that made the cut because it was 19% or something from the end of april to the beginning of october in 2011 we saw a 1920% draw withdown. we saw what looked like bottoming action and then basically the start of what we have now. >> and then 15, 16 market looked like that.

i made the comment last night that this market reminded me of how the market traded in 2008. that's not to say we are having a crisis but you had the massive bear market rallies and ripped your face off if you were short and you could make a lot on them if you were long. that's really what i'm looking at here. i don't know if we get to new highs. the fed wants to cut rates the dollar wants to tank then rip to new highs but until that happens i think you have a great opportunity here to catch a bear market rally. >> corporate insider buying has doubled over the course of the last two months. and the last time you saw that happen was august of 2011, market was down 19%. since that time it's up 100% i'm not going to sit here and claim that we have 10 oh% upside from here. but i do believe that the corporate insiders now believe that there is enough value in their stocks that they are getting back in and getting back in quickly. >> if we are a believer that corporations -- corporate insiders are goodbyers of their stock. >> there isn't a lot of data suggesting they are.

we know that buybacks nobody buys back at low they buyback record amount at high study base insider buying are. >> when you pull back the camera there is a lot of reasons why insider would sell tp oem one reason why they buy. there could be some stuff going on could be divorces split ups. >> the data points fit in both thesis so much to talk about we have a jam packed hour and we are sticking around for an extra hour for markets in turmoil special where we continue the coverage of the wieltd market plus a crazy day for wall street. but also been a crazy week crazy month. how much are the rise of the machines cribbing to the volatile swings? we swing later while the market reversed retail stocks tried to join but ended in the red consumer confidence dropped zpoit the holiday sales soaring and stocks stuck in the mud we tell tell you how to trade the conflicted csur.onme much more "fast money" right

after this

(sounds of race cars) the same iot technology on the ibm cloud that helps race teams improve performance and safety. bye. girls, don't wave at strangers. can now be built into everything we drive. when you apply expertise across an industry, bye! you can put smart to work.

welcome back to "fast money. if you thought nearly $1 trillion in holiday spending meant everything was rosy on main street .science is still

out after sky rocketing the retail etf tried to turn around with the rest of the market but ended in the red consumers spent $850 billion this holiday season but that blockbuster and the lowest unemployment in half a century didn't jive with the consumer confidence number coming in at 121.1. about five index points below economist expectations how do you trade the conflicted consumer, mark tepp ert? i think it was interesting because the forward looking part looking at jobs and belief in jobs in the future, that was all -- that was very negative. consumers were not optimistic about that. >> i still think the consumer is very strong. i think the consumer has ha ton of spending power right now. yes, i mean we have pulled back a little bit from where we were in july. but at the same point in time i think the consumer is in a great place right now as can be seen from holiday retail sales. now, it can't feel good to look at your november 30th statement and see that there is maybe a

billionle o million bucks in there now you're down 100,000 today. i don't think that feels good for any consumer sitting there with an investment portfolio knowing they are down 10% from where they were 30 days ago. that might be dragging. >> what about consumers that don't have the money that's in the market and they just feel as if anecdotally their friend got laid off or the wife is no longer working knows are the issues for the average person across this country. there is usually an insight to consumer confidence that leads to unemployment. which i didn't -- you don't even recognize that because they work in tandem. but if you see that maybe they're telling us that the recession is on the horizon maybe closer than we think. >> consumer confidence though is a coincident indicate we are the stock market if you lay it over the stock market it looks highly correspondented part of that is people spend about 5% of the wealth the wealth effect. it's natural for it to come

down but look at the consumer dealing with now lower gas prices, lower interest rates if they have a job not bad. >> big tax break tax receipts will be 20% up from last year. >> they spend 849 billion on things you spent about a billion. >> does not make retail a trade necessarily. >> right the question is why are the stocks acting so poorly. at the end of the day all of that -- that's just a word sal a add appear all that stuff tossed up in a bowl the reality is the stocks plunge the equal weight consumer discretionary secretarier is down almost 11%. yes it looks as though consumer discretionary held up well it's not there were a few names holding it up. and even those have gotten hurt. all of this when it's all the things you just said, record low unemployment all of this. >> consumer stocks lead. they lead on the which down and up the good tell is when you start to see these names sort of turn and have the real point of -- doesn't have to be hockey stick.

but when you see them recover they're the one nas get you out first. >> which ones do you want to be in then, mark. >> so we like dollar general, tj maxx, the discount retailers those are great right now. especially at this stage of the economic cycle. >> can you imagine a worse set up than the home builders then you got to filt they're out to home depot home depot down 10% year to date i think you are seeing the home builders bottom, blue in the face waiting for the home builders to bottom but they will. they got beaten up so badly, worse nan the overall market, you want to countertrend when these things start to turn then you see. >> they have on a relative basis. even though they made new lows in the past eight to ten sessions they didn't make it relative to the s&p. same with semis. sometimes the things that go first bottom early and. >> would you rather home nlders on retailers which would you choose. >> home owners >> same question to you. >> i think probably -- i think the home builders.

but in the retail sector if you look at it, beyond just the kind of the consumer confidence it's a sector that's being disrupted and massively disrupted by amazon and that model what you want to to buy in that situation, buy the disrupter if you want to say completely retail focused then i think amazon is the place to look. >> still amazon. for more on the conflict the consumer why one technician sees a retail rally ahead head over to cnbc.com for more this market has gone wild and it could be thanks to the rice of the machines we'll tell what you it means for your money plus banks on track for the worst month since february out but a trader says now could be a time to buy the group. i'm membersa lee you're watching "fast money" on cnbc much more right after this

welcome back to "fast money. it's been a wild week on wall street stocks getting slammed on monday for the worst christmas eve ever then yesterday the biggest point gain in history. and today a nine hundred point reversal the biggest comeback in a decade what's behind the swings in could it be the classic case of man versus machine check out the article from the "wall street journal" titled behind the market swoon, the herd like behavior of computerized trading pointing to the rise in electronic trading is this the driving force behind the huge point moves we'll bring in bob pisani for more on this we hear it all the time. >> i'm sorry, melissa, i know folks it looks scarey. the dow moves 800 points in an amp. how could it happen? there is a lot of players in the

markets, folks one of the larger players are quaned funds but they have blends of stocks and bonds and commodities. all of then, all of them have levels at which they buy and sell assets. so for example, we saw clear signs in the last couple months that many traders would sell when the s&p dropped below its 200-day moving average in the old days when he it happened the trader called on the floor 20 years ago and sell it would take a while to get nacelle order through. not anymore. today, thanks to algorithms you can electronically insert an order into the market the second that level is hit. the second now if a lot of people have a strategy to sell at that level, you get niece big moves. i know, it's disconcerting it is to me too but don't kid yourself it's happening because a lot of people want to sell but are these quan funds the cause of volatility. >> that's doubtful remember the markets had low volatility for years we kprand

with the low low violet to it vix was below 12 most of the last five years. if machines profit from high volatility, why didn't any cause more volatility? the answer is, they can't. volatility spiked notably in the beginning of october for some very obvious reasons on concerns that the fed was going to be toos aggressive hiking rates number one. on data showing china slowing. and on tariff worries. none of the issues were resolved the volatility continues the markets have a lot to figure out. we have no idea what 2019 earnings are going to loobl. and of course on top of that we have political risk in the white house as well. that too is also a big problem back to you, melissa. >>bob wob, i'm sorry for being obtuse about this. but are you saying that the machines didn't cause the volatility because if they were in the markets they would have created more volatility. >> remember this debate we had over high frequency trading in

2010 and 2011. we kept saying these people who are coming into the market providing so-called market making activities are causing volatility it turned out for several years there was no volatility. these high-frequency traders almost went out of business. they couldn't cause volatility now, listen there is no doubt that if volatility fwoes up they definitely make more money, providing more opportunities to provide bids and offers and do market making activity i have no doubt profitability goes up for these -- high frequency traders and even potentially for some of the quan funds but as for causing the volatility no i'm not with you on that. >> thank you, bob. bob miss i at the new york stock exchange i think i agree with bob in terms of causing the volatility but there is another part of this and that is exacerbating volatility you think so. >> really. >> no it's all the people making the decision at the same time. whether at a computer or over the phone we have heard this

argument a thousand times. when i was coming up in the 90s there were the sos markets remember 1987 portfolio insurance. computers caused that. that was the problem with the market this is just this is natural parts of markets if you want to blame anybody blame the fed. they sucked volatility out of the market. >> it's natural but think about the footprint on wall street think about how you used to have the ability to work 50 orders or 20 orders or 10 orders and used to work them where bob said you would call a brokerer and have a conversation i want to buy 100,000 shares of xyz. you don't have that ability anymore. what happens is you have 100 orders and five minutes to execute them in you get the algorithm that spits out and does all of it you have the algorithms that is trading millions of shares, billions of dollars on an everyday basis and it's doing it more effectively but not with the human element. >> okay.

>> so they run it up and down. >> i would posit make it makes the markets more efficient this is the efficiency at its height to have the market swings in a compressed period of time that otherwise would have mapped over a longer period of time. >> let's take for the individual investor to have to call up the stockbroker and have him come to the line sell some of in and that where it all -- think about it in 2000 maybe 12% of all money was in etfs or passive index based now it's up to 50% or more it's a better thing. you can say i want to get into dwld gold and now out of my financials into biotech it's not a bad thing it's good. >> for the retail investor because often times you hear about the rise of the machine as and the retail investor is at disadvantage is that the case. >> i don't think so. i think what's going on right now is we're at the stage of in stock market cycle where volatility is going to increase. it's just a given. it's not unnatural s in the longest bull market in

the history of the united states, many ten years in the making it's not unnatural at this point for investors to feel a bit of discomfort when it comes to experiencing or hearing about potentially slowing economic growth next year, or a deacceleration in earnings growth i don't think the retail investor is at a disvaping. >> it gives the retail investor more entry points, more exit points on a more frequent basis. that's why knowing the technical levels are more important than ever because when we sell down to 2350 in the s&p and stop on a dime, almost to the decimal, everyone's algos were sent set to the same number in the s&p. >> the extrapolation of in though is the four-year figure, the 2-year figure all the figures in terms of the recovery from market sell jofts that also gets compressed. is that why you said a year. >> there is no way to know that. but what we do know the less friction there is -- just what you said in a way costs are down

you can trade stocks for free, get baskets. all of that is a positive things but it also like anything it can at certain moments exacerbate certain things it's already exacerbated >> haven't most retail investors outperformed hedge funds in the last ten yeerps? right. >> think about -- >> yes but that's comparing people long versus people long short in a bull market. >> think about what you said before the passive investing when you go into a passive investment it has to spit out in buy or sell every one of the underlying issues within the etf within the exchange traded fund. it the creates the massive moves when sbun someone is liquidating a passive portfolio. >> much more on the crazy market swings and we get jim cramer's take on the big reversal later plus financials have been taken to the wood shed this year but a trader says it could be time to buy the beaten down group. he tells us what has him so bullish when "fast money" returns. shield℠ annuities from brighthouse financial

allow you to take advantage of growth opportunities with a level of protection in down markets.

so you can be less concerned about your retirement savings. talk with your advisor about shield℠ annuities from brighthouse financial, established by metlife. from brighthouse financial, your digestive system has billions of bacteria, but life can throw them off balance. re-align yourself, with align probiotic. and try align gummies, with prebiotics and probiotics to help support digestive health

welcome back to "fast money. financials like the rest of the market making a big comeback and ening slightly higher. but the sector still on track for the worst month since february 2009 and the chart master says more pain ahead. the what are you looking at. >> a bunch of things but here is all data now again this data only goes back to the 1989 in the current sector gnomen clat yur we have but what optically is clear there is the financial crisis

low in '09 this is the xlf or the s&p sector and here is the high but the interesting thing look where it stopped a perfect -- that's the 2007 just before the entire collapse of the entire banking system and got bailed out what we have by all consistent a double top let's zero in on the recent selloff. we know financials are down hard now, what i'm thinking -- grasso referred to this in the market overall. i'm thinking at a minimum we undo the entire election move. so that line would imply if we were to get to it another let's say 9% to 10% just to get down to the line. let's look at the next chart and draw the actual trend line so this has work from the crisis 2015 possible '16. were we to get down to that, which again is this top. let's put it together on the next chart

here they are. i think that's what's coming i think we're going to both find support there and the trend line and that's the point at which one might want to get involved in financials in a big way or even as overweight then this. this is the thing that's inescapable. here is the double top again right. where we peaked in 2007. but look at the relative performance. yes. financials off the financial crisis low, huge advance what did they do really? they did this. it's a place where money goes to die. that's because of all the dilution the issues of shares, to try to get themselves out of the big rut they were in, bankruptcy and basically one has not been paid even as they've advanced relative to what could have done with other choices in the market i don't think financials basically other than a trade are worth being overweight >> b.k. here though disagrees. >> i do. >> you say time to buy. >> yeah, i mean look at what happens. when i'm looking at the markets

i'm always looking for bad news, good price action. let's look what happened over the last week. we had mnuchin make the ridiculous call to every single bank asking are you liquid the chances that we have a problem in the us banking sector are so slim. the fire trucks have been pointed right at these banks since 2009 there is no chance there is another fire in my view here secondly, now the selloff has taken us to below book value which is something that's relatively unusual and even if you think that banks or utilities trade at book value they are trading well below book value. and unless you think there is a recession coming in the next three months that book value should be all right. and then last thing is the yield curve. we talked about it flattening the entire -- almost the entire year what has it done the last couple days it start the ticking higher. when you start to see the yield curve resteepen that could be a catalyst for the banks but "fast money" it's a good risk reward. >> d. o b.k. when i look at the

chart i made the point with the double pop tp the run up during the crisis was because of the leverage banks could take they are not allowed to take that they don't have the growth element. >> the best days behind them. >> behind them the run up to the election was deregulation i'm finding a lack -- i hear you on the other issues. but the growth is out of them. the leverage. >> but it. >> that should have never have been there is not coming back. but that was the oem reason why you should buy banks and now deregulation with a divided government you're not getting more of that. >> but you're not getting less, right. it's a status quo. >> it's priced in. >> all the things you could have said -- you could have said the whole way up i would agree and that's why banks should trade at one times book. look like a utility at least in the current state. now they're trading below book to me it makes sense to buy enemy and then secondarily you're not getting much of a change in this environment and with a flat yield curve what did banks do they lend more.

>> they are dirt cheap goldman sachs as example trading peg ratio of.5 a. >> that's the bank you like though. >> no, i don't. >> anyway, proceed >> so, you know, the banks that we like are going to be the baepgs that have exposure to the capital markets, right we want to make sure that given heightened volatility that they have an opportunity to actually benefit from trading revenues. so goldman sachs right now to us looks like a no brainer.78 times book value we're talking.5 5 peg rio. >> also pushing trading revenue for the big banks. >> i don't think they are push going. >> the capital markets are very bad. the comps are hard all the mythic stuff that's equities that's not a growing area that's shrinking. >> why to you do you hate markeace trade. >> i like it on a valuation basis, right it's one of the ones cheaper on price to book. the problem i have with goldman sachs is they're not necessarily

that market player any more. there is a transition going on it's kind of -- i hate to say turn around story but it's unclear what they look like. why not just go with the pure play on the banks like bank of america one of the cheapest upon a price to book ratio. just dow with one of those, somebody that does lending, that you know is out there expanding their book to me that's a good play >> i mean, i guess it gets down to this. i have a lot of clienting say the balance sheets is the west they've been in years not as much risk and but if equities topped as general and looking at the downside .odds are that the banks outperform, the odds are low. >> coming up energy sectors on track for the worst quarter in a deck as oil is cut it off we tell you if anybody buys the crude crush. as we enter the final days of the market find out what is on steve's radar when "fast money "

rebekkah: opioids has taken everything and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning.

allow you to take advantage of growth opportunities

with a level of protection in down markets. so you can be less concerned about your retirement savings. talk with your advisor about shield℠ annuities from brighthouse financial, established by metlife. welcome back to "fast money. we've got a market flash op afri, the stock soaring after hours. let's get to adidi roy in san francisco for the details. >> the shares up almost 22%

after green growth launched a takeover bid for the canadian cannabis company under the deal afri sharmds get 19.57 shares of green growth brands for each share representing a 45.5% premium over afri closing price on the tsx on december 24th. the ceo of twroen growth is peter hov agent a former vikty secret and american eagle outfitter executive. he says we are confident the significant premium we offer and the opportunity to participate in the growth of a stronger combined company are so strong we are taking it to the shareholder sees they engaged the board to negotiate the agreement before launching the takeover bid engreen growth says combining the two companies would maid a formidable player and combine the low cost cultivation with grow green growth's growth footprint. they say they will see more m

and a as we head toward consolidates back to you. >> adidi roy we don't know what afri will say. but this obviously puts some sort of a the floor under valuations in a space that has gotten battered from the risk off move in the past couple months. >> when you look at this i made the analogy it bitcoin you add the alternative investments. and the large or small family offices into bitcoin and cannabis now but all the cannabis names are so bloated. bloated on valuation no one knows how to value them maybe this will help but they're all struggling for the october 17th where it was the legalization date in canada to reconnect with that level in the stobt stocks you got to be long them all but you're taking om pain. >> from cannabis to crude oil on track for the worst month since 2008 even after the big rally

one brave trader bets it's ready for a big rally. mike khouw joins us from san francisco with the "options action." >> exxonmobil, the largest of the big integrated oil companies saw about two times the call versus put volume today. and that activity was largely the result of purchases of the january 69-783 one by two call spread i saw 15 by 3,000 trading. they're buying the 69 strike call selling two of the 72 strike calls against it. my guess is this is likely what we call a stock recovery strategy so often times you own a stock, you have seen a sharp decline in it you look to boost the near-term returns you can buy a one by two call spread gichg you gains from 69 up to the 73 strike they sold that would represent about pennsylvania 4 to 8% increase over the course of the next couple of weeks in exon if it plays out. the nice thing is they are not risking a great deal to the

downside in the event that oil weakness continues >> do you think we need to see crude rally or continue the gains in order for the stocks to find legs, mike? >> yeah, i do. especially the integrated plays. because of course you know what are the big timed oil companies but you know they're reserves. and exxon would be the largest of those you know, i've long favored north american oil service companies instead of these in terms of the long-term and actually mngts of integrated name i might prefer chevron to exxon. but if oil sees a bounce these follow but if there is kinned weakness in trouble. >> i would imagine if you want to reach for beta you go for the shale names, right. >> yeah, i mean actually we're -- the companies that we like right now when talking energy we would favor ox dent alpetroleum. that's the number one pick a dividend yield of a little over 5%. and it's -- much more diversified company. i think a lot of the skralted

companies have been in favor but i think with oil price volatility i think the more diversified. >> you like cop. >> i do, yeah. another good dividend pair, yeah. >> the problem is conoco up on the year but oxy up difficult to buy for a dividend. >> thanks out there mike for more "options action" check out the full show tomorrow 5:30 p.m. eastern time. much more on the dow huge reversal with the special markets in turmoil ding at 6:00 p.m tune in to find out what jim cramer has to say about the move but if you were wondering what to do we have you covered. the send us your questions at cnbc "fast money." much more "fast money" on this very busy night. >> announcer: "options action" is sponsored by think or swim by td ameritrade. p my game.

i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade. you mighyour joints...ng for your heart...

or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life. ♪ there's no place likargh!e ♪ i'm trying... ♪ yippiekiyay. ♪ mom. ♪

welcome back to fast as we head into the final days of the year what topics are front of mind for investors in time for our trader radar grasso head over to the plasma break down the biggest themes right now in the markets. >> sure. this is always a real heavy conversational week. last week of the trading year. everyone wants to hold on to what they think the themes are or what they'll be in the first quarter. look at rebalancing, right the marilyn thing. pension funds on monday goldman sachs had out a piece that the pension fund rebalance was going

to be $110 billion with a b, come into the marketplace. then after the big rally they said it was going to be, scratch that, 84 billion after the turn around today, it's probably going to be around $70 billion coming into the marketplace. those are big numbers. there is some flexibility. pension funds do not have to do it by year end but the majority i would say 90 peppers are going to do it by year end the market has to absorb that. equities must be bought. let's go on to the next thing. positioning. we talked about it, whether carter said buy the imt wm, the russell, small caps orp whether people are getting back into the large cap tech stocks. so the news is, right, that what we've seen has been the xlk, the triple qs, all the tech names, they were the ones responsible for in movement in the marketplace. so if you don't have that anymore, if they're not bought

and it's the iwms that's not putting the market to new highs. you are getting more of this is if large cap tech is not bought. last thing, bk mentioned this at the top of the show. trade deal u.s. china that is huge we have forgotten about that because powell eclipsed it if we get the trade deal that is good easily for 10% in the market we are putting darts on a dart board right now. but i don't think anyone would argue with a 10% move based on a trade deal getting completed with china in the first quarter. >> you know, grasso, the past at least yesterday it seemed like short covering was a big catalyst for the huge gains we saw yesterday, some of the most shorted stocks in the market had some of the bigds gains, abercrombiey and fitch, bed bath and beyond, those are a couple in terms of positioning is it also the notion that shorts are out? or soon out of the market? >> so i've been a professional trader since 1993.

every rally starts off with a huge short covering rally. you expect those to move first yes, there is a problem if everyone has covered but trust me, not everyone has covered. there's been such a -- a giant move to the downside there is no possible way that everyone who has to cover has covered yet but, yes, great point. shorts always start that rally >> you know, it's interesting that comment on the shorts, because everybody hates the shorts out there except when they save the market so i mean, shout out to the shorts out there thank you for being buyers. >> thanks for the historic one-day gain. >> exactly. >> all right thanks grass grasso. jim cramer live on the big reversal plus the traders tell you the first move tomorrow. much more fast right after this.

to him for the final trades. go around the horn carter. >> i like disney here. offense and defense. >> brian kelly. >> a little bit of a contrarian mood today so i pick oil and buy xop, the oil and gas exploration etf. >> mark tepper >> buying facebook beaten up way badly. >> grasso. >> len ara beaten up badly i'm still long you should get long. >> that does it for us here on

fast see you back here tomorrow at 5:00 but meantime do not move we have another hour of jam packed markets coverage starting now. from a record breakingever >> to another big drop today followed by a sudden and wild jump into the close. >> told you anything could happen in that final hour of trade. how about an 865 point swing up. >> are these new surges of volatility the new norm? did we just hit a bump tonight, an all-star cnbc lineup, including jim cramer, melissa lee, and the traders plus, the closing bell team. they're all here to help you shelter your money from the storm and help take advantage of these sudden and sharp ups and downs for the stock market