but the bond market wants to price in economic weakness. >> see if apple gets a bounce tomorrow telling on how people view that. >> you have a full day flush from extradepressed levels stuck in the 140s. >> "fast money" begins now "fast money" starts right now. live from the nasdaq market site over looking times square. i'm melissa lee traders are dan nathan guy adami. >> another wild day for the market the sea of red one analyst says there is an easy way to profit this year he will be here to tell us what it is. plus $74 billion that's mouch bristle myers is paying to buy cell gene. is there another big deal coming but first we start off with the markets selloff. the bear roars again it was the warning that shocked wall street. apple confirming the fierce of

investors that a trade war with mcis causing a slowdown. then light manufacturing data stocks slammed the dow down nearly 700 points at the lows. and this is after we have already seen warnings from the likes of fedex, micron about the macroenvironment is this a rude awakening for wall street as we approach earnings season? shall we brace ourselves for warnings and guidance cuts. >> i think you have to brace yourself if i'm an apple supplier -- tim spoke about in last night as did dan. the door has been opened if you want to guide lower now is the time. if you have so many excuses you can make to guide lower. why wouldn't they? yes is the answer. i think s&p earnings, the -- it has revised lower you have to wonder what the right multiple is i think pete my greet. the vix at 25.5 is still too low. that should have a three handle and you might see that in the next week or so. in my opinion i think you have to re-test the 2350 level we

briefly touched i believe christmas eve or there base. >> apple closed at the lows of the session pretty much. terrible price action. no forgiveness for what might be seen as a china problem. more so than an apple problem. maybe a bit of both. >> i don't think this is just a china problem. it's suddenry a refresh problem. incentive problem. >> lack of innovation problem. >> a lot of things and yet we are supposed to get excited about services growth. i can tell dan is is not excited over there i want to say i think today was not even about apple today was about macro. all about rates. all about a carry trade in the end that trying reported stops the 10-year bond it rallied almost an entire point we are talking about the fed and powell is out tomorrow we talk about at the short end of the curve is part of the curve the fed can control not the long end i think they lost the short end too. we're at 2.39 on the 2-year note and the fed is pushing in a

direction they may or may not go adp was good a bad ism and knocking the market down. >> bad ism on top of other regional manufacturing surveys which came in lighter than expected what does 10.5 a on the 10-year yield tell. >> you you would think that should be decent -- when you think about the fact that. >> bad news is good news. >> exactly just saying we're in a period where people are selling first, asking questions later you know, listen, i thought the price action in the s&p 500 to me it is broader than apple. heading into earnings period what was unique was a it was the first dade twrading day of the year be owe b one of the largest stocks in the market when you think up the setup into earnings if we don't have preannouncement and expectations are high for amazon or gogel or other big ones or microsoft which haven't given back the gains which apple has you have a lot of single stock risk there but for the other names in bear

market the last year or so there is less single single stock risk. >> it's been about vision for a long too many which started with the industrials. when we went through the last earnings, the industrials kicked it off and they are trying to get vision to look forward the problem is it used to be you'd get six month nine months, accurate now maybe 30 days. they have no accuracy to look forward in terms of how is this going to change things how is the trade war going to be changing things for these companies? where is the cap excoming. >> how do they know how much they want to spend and how to spend it if they don't have any clue in the trade war? that's why i continue to harp on the idea -- i understand the fed everybody said fed, fed. i say trade war first, f.2d. >> i want to make one point. this is why the tax cut was such a bust we were seeing the lack of visibility we didn't see the cap x boom through the year that was one of the major reasons for the corporate tax cut. we didn't see it year over year, tim, think about

it think about how pessimistic we are versus optimistic last year at this time. >> i do think about it you could have skeptical about whether cap exwas going into companies whether we are buying back stocks and capital markets engineering 101. the reality is we have stolen victory -- we have stolen victory from the jaws of defeat -- we stole -- >> you nailed it, guy. >> the bottom line is it's too bad because i actually think we were in place where a lot of the trade dynamic really is what's at work here because it's forced every company to stop cold on plans on cap ex this started march of 2018, folks started with steel tariffs and right away that threw the supply chain into flux. >> in the past 30, 60 days we have seen the back pedaling. you look at how apple warned

just the end of november they came out and said china doesn't fall into the category like the other meerjing markets like braz. fedex when it warned it was a month afterit raised guidance. these are just sudden, dramatic reversals in outlook. >> dramatic reversals but in terms offed federal express this is a stock peaking this this time last year and has been a slow drift lower the entire year exacerbated over the last month, month and a half if i had to pick one company i'd be concerned that they could come out and warn -- we talked about this -- we talk about caterpillar with almost a single digit pe the but is that telling a story? dan mentioned this last night. if cat comes out and warns- they are due to report january 29th that could open the flood gates of the other sears eseries of names we talk about. >> this is why so many of the names you see the contraction in pe people are saying look if they can't provide vision i don't want to be in the stock. a lot of people have been

selling -- >> at what point is it in the stock? at what point is the correction enough. >> it's been going on three, four months. >> but persistent. it's not like they stopped you mentioned volatility i don't think we see a break in volatility until we get answers to the trade war thing because we are moving 2% a day whether we like it or not. that means the vix should be at 32 trading at 25 right now is a discount that gives you an idea 32 vix correlates to move daily. if you put in the intraday it's far more than 2%. >> the currencies tell you -- niece are 2.5, 3 standard deviation moments meaning in the bell curve these things never happen these are the deepest like with which hadty -- >> when you look at the volatility since we had since the taper tantrum when the yield was at 3% look at that chart we broke that upfriend on that.

it's been in place since what a lot of people call a generational low a couple years ago. when you look at charts like that take off the 10-year yield you say okay we might have hit a major inflecten point. i don't believe the 10-year yield going down right now where if it goes back to 2% it's not good for equities. >> the next guest says apple is the tip of the iceberg and earnings season is ugly. tom lee, happy new year to you the last time we spoke was approximately two or three weeks ago when you said you were looking for a 10% rally in the s&p 500 going into year end. >> yeah. >> what has changed you to the point where you say, earnings season is going to be ugly you know, this year may not that be great >> well, you know, clearly we hoped for a rally into year end on seasonal. it didn't happen it's been unfortunate. but we weren't really thinking 2019 was necessarily going to have a lot of tailwinds. and i think a lot of things have happened in the last couple of

weeks. i think probably the deadliest has been what the fed has done i think the fed has really undermined liquid markets' confidence about how policy is seen that's really worsened trading dynamics. >> fed more so than tariffs? >> yes. >> and trade. >> yeah, because of the sense the trade dynamics can be arguably transitory. in other words, if you have tariffs that are hurting visibility once you get resolution you know sort of there is pent up demand. but if you tighten financial conditions, you force people to liquid ate positions be forcing shrinkage you see chaotic moves across markets that's damaging. because that takes a lot of time to fix. >> doesn't that assume that china's economy is -- well, i don't want to say falling apart -- deteriorating simply because of the trade war and once that's removed that that economy will actually be okay

because it seems like there is a whole other separate situation in china exacerbated by trade tensions but may have been in effect even prior. >> i think one of the structural shifts taking place globally is china's contribution to global growth is actually shrinking relative to the u.s. let's say the story from 2000 to 2010 was china was the majority zhar of gdp growth you can get from the data. in the last five years, the utehs has contributed more to global growth nan china. in fact em ex-china has shrunk on a u.s. dollar basis the gravity is shifting back to the u.s. >> it seems to me if you think about the fed -- and people want to point at theed fed -- and there are reasons for that but the fed is no different than they were two months ago i would argue powell came on two weeks ago and was as dove shall as he could have been. he is not coming out and say,

there is no hikes next year. he has told you you're at the bottom end of neutral for the fed. that's pretty darn i think dovish but at a minimum for data dependent folks. >> well there are two ways to measure. one is market reaction to fed rate tieks the single worst market reaction to a fed hike was an 8% decline in december 2018 the second worst in history was the march hike we have already had two instances where the market and fed didn't see eye to eye and the fed moved in a different direction. the second if you look at the history of hikes when the 5/1 or 2/10 is flat it's almost calamity this is the most dangerous time for the he had to hike i don't think it's about being dovish i think it's the path so -- >> the december hike shouldn't have happen. so on the table in the long time. >> if you look at fed futures probability the probability of a

hike it's 50% for a cut. they have to talk about the balance sheet now. i think this is -- we have dangerous financial conditions. >> so, tom, but think about it we spent a lot of time talking about the fed. but the back drop i think email was trying to get. we had the weakening economy globally we didn't vermont synchronized growth expected in the beginning of 2018. then you think about trade look at semi conductors as a group. great example especially with the back drop of apple we had all the ordering in q 1 and q 2 in anticipation of this really what is going to be an unforced error if you think about it as far as trade tariffs. and then now we get to the back half of 2018 early 2019 and we're seeing considerable growth, you know slowing now all of a sudden you have an inventory issue in 2019. and that could exacerbate all what we're talking about, correct. >> i would say that in that context, i almost think monetary policy should be very different than where it is today to me, i see a lot of damage and i can see it in the clienting

they are shrinking books this is not countercyclical. this is pro cyclical and it's damaging markets. >> do you have a market for 2019 yet. >> we are going to publish that next woke. but in that context i think that ultimately the fed does do the right thing. i don't think we have a recession. and a political level, the 200 week moving average the stock market is right there. that's where markets turn if they're in mid-life crisis. >> tom, good to see you thank you tom lee of fund saturate. >> i think the fed is doing the right have. i don't have a fed conversation. if you are talking about president trump for example and his barometer miss report card has been the stock market, more so than ever in his dplrgs they are in dire need of a win you would imagine given what's happening in the markets the last month, month and a half maybe he reaches out to president xi and says this is mutually assured destruction let's come up with something making us look good. maybe you get a trade deal that

for a week or so with assauge the fears in the market. i happen to think it's greater than just that but that could happen and could happen. >> jerome powell speaks upon pan janet ye janet yell and ben bern naeng. >> the two that cot away scot-free. >> the people waiting for the fed to react to it market they will be holding their breath a long time. anybody who didn't think the fed would o in december. -- this is what happened in the first quarter of 2016. i'll say it again. hopefully we're in 2016 light. open 12% and it was a growth stair err o scare. and we didn't go into recession we got that. people blaming the fed right now is absurd. you had to know the fed was going to do this they've been telegraphing, maybe overly telegraphing they're going to go and be robotic about it and they're concerned but the ism the 5 points lower

haven't been this low in 26 months u.s. economy is slowing down and the fed is always lagging the move investors should figure it out to blame it on the fed in the last two weeks is not what we should do. >> pete, how do you position yourself right now. >> we still see downside when i look at the paper in the options world right now, derivatives world i was buying put spreads in the iwm, the russell. because that held up better than people might think in terms of a couple weeks aigt. 125, today 134..5. >> i expect to see that maybe get. >> real quickly on the russell it round tripped the motivate of the last two years since 0u6r. will you see that in all the major indices. but they are hard pressed on days like toopd. alter tape bombs out there that could squeeze the market kicking the can down the road on tariffs getting past of the march 9s deadline. i think that's the sort of thing that may give you the

opportunity to put on the protection you may further into the year. >> coming up, wall street has been on a wild ride since the highs in september but if the volatility has you dizzy, don't worry one top analyst says he he has a huyer fire way to profit but check out this a 74 billion-dollar deal with bristol myers if you listened to pete narjen he told you it was coming much more asmoy"ig tethist ne rht sors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

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its all included with your amazon prime membership. that's how xfinity makes tv... simple. easy. awesome. . welcome back to "fast money. check out one big bright spot in the market today celgene soaring as bristol myers announces it will acquire the firm for a whopping $74 billion. and pete pitched the stock back in october take a listen. >> and when you look at this company and you start with the ceo, this is a ceo who has been in the world of pharmacy 8s as well as biotick 30 plus years. got to love that experience. also, he is a gambler, a guy very aggressive. made the largest acquisition for celgene in juneau therapeutics that sets up for something good going into the future. >> nice call what do you do now, pete

you expect more deals in the health care space. >> i think there will be more deals. in terms of celgene you got to exit and walk away and be happy with the move to the upside. looking forward there are all kinds of names you could throw out. i don't have a inspect specific name but gilead is a name that's interesting. it's a big bite. >> $85 billion-dollar in market company. >> the deal today we talked about -- there needs to be pipelines. that's what everybody is after that's where the money is. if there are blockbusters sitting in the pipelines especially in the mid-or late stage right now that's something that is absolutely -- but the big pharma wants and needs that. >> today's deal wasn't about a pipeline it was in defense of a pipeline going stale, no. >> it was acquiring a pipeline. >> that's the whole process. is how is your pipeline? do you have drugs. >> kind of a personal question, pete. >> is there competition or not and at eall the rest are they getting ready to go generic. competition coming out there

that's part of it. even though i think there are great pipelines in merck and pfizer and some of these if they want to diversify and get more that's the way it takes about $2.5 billion to get the drug to market. >> cell again has three drugs in the pipeline expected to be approved by the fda in the next few years or so. >> how the mighty have fallen though a couple of years ago. we were talking about the celgene and they were game fishing. now the worm turned. i look at prophet bristol myers and say what's going going on with bristol it has underperformed the market and has a ridiculously poor day today. they report in a couple of weeks. one has to wonder. you see trough valuations in bristol myers. i know pfizer trades more expensive than the rest of the space but it's the best out there. for my money pfizer works. >> mel introduced this segment by saying a bright spot upon a crappy day

>> she didn't say crappy. >> i'm saying crappy you know what happened when you take one piece of crap and another and put them together. you have a bigger piece of crap. the celgene still down 37% from the highs. two companies really struggling. >> biotech has been trending downside. >> it's for the a broit spot if you see acquisitions out there. >> you see the names out there that do have growth. >> single digit pe names. >> yes that still have growth and throw off incredible amounts of cash. knows are the names -- with the pipeline, knows are the names that are going to actually be very, very attractive. >> they were just all underappreciated. >> i put them together. >> let me tell you something, biotech right now is got -- we can split them up. biotech has gotten cheap we see the single digits pe of monster biotech companies with monster drugs in the pipeline

and have gotten cheap. they are opportunities you mentioned 120 for celgene trading down in the 60s. >> can i say this for the sloughers out here most of them are trying to figure out what td right now whether to add to stuff sell stuff. >> they want health care isn't biotech part of it. >> this is the worst time to buy things for takeout it may sound great and interesting. things may look cheap but if you can't confidence in the 2019 numbers and. >> you can't. >> take my box. >> worst possible time. >> isn't that why bristol myers went after celgene they bought a stock down 16% off the comps. >> celgene was on a short list you might have owned bristol down 15% trading multiyear lows. >> split them up. >> the worst possible strategy in the bear market. >> if you look at the biotech sector since the 26th and everything went up a bit the ibb outperformed every other name in the top end of the biotech sector. >> the buoyant is biotech is

working now. health care biotech is working in the. >> you made the argument that bristol was a takeout. you could have long bristle or the same reasons. >> let me ask a simple question, guy and let's say you're not buying ibb you're buying it for defense. >> exactly. >> and this could be a kick are. is that sound thinking or no i know you skof at that. >> but fiez are hasn't been defensive. actually pfizer has been an unbelievably growth stock over the last month actually since march when president trump tweeted about pfizer -- i'm paraphrasing ripping everybody off. it was a $37 stock now and went straight up. i don't think it's defense necessarily. i think you're actually playing offense. to dan's point before when you take one of those things in one hand and put it in the other sometimes you put it together you create fertilizer. what comes from fertilizer growth. >> growth. >> thank you, pedro.

>> the last word here. >> i didn't know where that was going still not sure. >> for more on the blockbuster health care deal and what it means head over to cnbc.com. you're wachgt "fast money" on cnbc first in business worldwide here is what else is coming up on fast. >> the bears aren't hiber naturing this winter how long does it last? guy dmaumy has the answers plus. >> may day. >> airlines coming in for a crash landing. but is there a buying opportunity amid the wreckage. >> the traders weigh in. much more "fast money" right after this , they probably know what they're talking about. or the one that j.d. power says is highest in network quality by people who use it every day? this is a tough one. well, not really, because verizon won both. so you don't even have to choose. why didn't you just lead with that? it's like a fun thing.

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hey, everybody >> welcome back to "fast money." volatility sweeping the markets again today with all the major indices closing sharply in the red.

for more on what these wild moves mean for investors let's get to mike santoli as the nyse hi, mike. >> this volatility which has been going on more than three months, obviously unnerving investor who is were not positioned for a rapid repricing of the market for a slowdown it's created more risk aversion at the start of the year than you normally see and it's also registered a lot of technical and valuation and sentiment extremes of the sort that really resemble what you have seen as other -- in the region of other market lows. let's look at a few. first is the relative strength index for the s&p 500 itself a 14-day relative strength index. look at the chart. without getting into it too much the rsi measures the momentum and acceleration of the index itself relative to its trend basically it's been falling rapidly as we nop this is about a day old but even more so now and down near levels where it has bottomed during the post financial crisis era in other words when you are not it in a full blown bear market

when it gets lower this is the region where the market attempts to bottom. a relatively similar story if you look at the percentage of all stocks that are in some kind of uptrend -- this would be as portrayed about a 50-day moving average above the 200 day average -- not to get into details. but look at that, back to early 2016 levels in terms of how washed out the tape looks. at least by this measure and then the mood of investors, the sentiment, you'll get -- investors intelligence weekly survey, the number of bulls minus bears or the spread between the two you now actually have the finally down below zero so basically a bearish consensus from these professional investment adviser types that's a start you go back to 2015, 2016 you got lower than this. if you wrapped it all together you basically say that the technical valuation and sentiment picture looks like it did in 2016. in 2011 it was a lot worse in 2008 so the question for an investor

is, are we in the early stages of a full blown bear market? if you're in the then this shows the volatility might stay but it's somewhere in the region of the market attempting a bottoming process zboo is it thank you, mike. mike at the new york stock exchange our next guest says if you are worried about the surge in volatility there is a sure fire way to make money. let's bring in rich. happy new year to you. >> hi, melissa. >> obviously you want to look for companies bifurcating from the surge in volatility. >> exactly i cover the exchanges in the trading companies. the higher in volatility correlates with volumes. you in fact you see the cme record volumes cboe recordvilles and all the derivative volumes you have also have trading companies that when you see the volatility when they make money on the spread the spread wine widen virtu is a great name given the intraday volatility that spreads widen out these are companies that when we see the moves that we have seen

in the market over the last couple of months like mike says and even in particular the last week of december when it's quiet niece companies benefit. >> it was unusual the last week of december to see the amount of trading volume we did see. that was unusual is there a point know where increased volatility is actually bad? does it are the so of cross a line at some point >> it did in the first quarter of in year when the vix spiked up in one day. that actually shook out the double leverage inverse e etfs in volatility. so do you believe leverage meaning minus -- inverse minus 2 x if the vix goes up 50% it's minus 100% which means you're out of business. which occurred in february in last sort of move in volatility up has been much more orderly. it you can call it orderly but it hasn't been a single day spike. it's been a sustained level of

volatility like you all talked about, we think wsh i think volatility is probably looking positive outlook going forward in 2019 because these drivers are still in place and they're driving the moves in the market. >> rich, in terms of the cme you are right average daily volume up 36% year over year. and this has been over the course of the year where you've seen it. but how do you get yourself around valuation in i think cme is close to 26 times forward earnings right now. >> this company -- there is no other kbngs in the world as diversify as the cme when you talk about them benefitting from volatility look at interest rate volatility, whether the short end -- and we are debating whether there should be cuts on the fed funds -- or you see the 10-year moving around from 3.20 to below 262.60 when you see energy and oil going from 75 down to 46 they trade energy products the equity products, fx products there is no other exchange in

the world -- and they have a pretty protective product as well. >> the highest% of the revenue tide to clearing and trading 85%. cboe is the 61%. nasdaq our landlord is only 25%. >> yeah, they unfortunately -- unfortunately they don't trade derivative products, not as much as the other frthree exchanges n the u.s. nasdaq has diversified away from trading. denna fried many has done a great job they're not as expose the or sensitive to the trading aspect of the revenues like the other exchanges. >> rich how do you explain from the highs in 2007 to the lows in 2009 the cme group down almost 80% from the highs obviously much greater decline, peak to trough than the s&p 500. don't you get a issue where if you are in a financial crisis it's great in the early months but when things get really dicey we see massive contraction among financial institutions in

general. >> see that's when i'm here to try to int oh out, these companies even classified as financials they are benefitting from volatility. i was -- i followed the cme since it went public back in '0 a. what happened they benefitted from the migration electronics volumes just kept going up and up and up. opinion and the one cardinal rule in exchanges if something goes electronic it's trading more it's easier to press a button than yelling and screaming and and some of you guys have been on the floors before they benefitted from the migration to electronics their multiple got ahead of itself too and the financial crisis brought it back to earth. i think that much steeper contraction than what you would see, you know, if we continue to stay in this bear market. >> rich, thanks for coming by. good to see you. guy has been a big proponent. >> a couple of weeks ago i went

and power pitched at the plasma the chicago mercantile exchange. and dan eviscerated me and he was correct. i'm in rich's camp i understand valuation i also understand -- i hate the term but you talk about moets they have one. >> i think the cboe is having bus they are the grad daddy, the biggest of the big and the fact that these guys -- the numbers this year because of the volatility escalated and there as long as it has been towards the end of theioer with i mean this is an up 20% year not a december even. the entire year, the volume when you keep an eye on volume i think this coming year we're seeing even more of that because i don't think we see volatility pull back until we get some sort of deals on the trading dsh zbloosh with this stock close to the prior highs and the valuation at 25 times i mean it's damned if you do damned if you don't. if it's going to underperform and volt volatility decreases. but if heats up and things get hairy you don't want to own

anything it may have the potential to outperform to the downside like the last financial crisis. >> i'll say quickly these guys ran when there was no volatility and through squikss inches that's why the stock outperforms knew. >> the selloff, the dow dropping 700 pointed. the everyone throwing around the term bear market we tell you what it means and how to navigate. plus airlines crashing after delta delivered a chilling warning about earnings and sending transports reeling we have the details. much more "fast money" still ahead. ent plan. with my annuity, i know there is a guarantee. it's for my family, its for my self, its for my future. annuities can provide protected income for life. learn more at retire your risk dot org.

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welcome back to "fast money. airline stocks knows diving after delta warned it might not be blue skies ahead for revenue. delta warning comes on the heels of a similar announcement from apple and it seems global slowdown fierce might be spreading. fill lebeau lass more. >> and the big concern and see delta is widely viewed as the best operational airline in terms of profit margin, revenue growth so if it's warning about potentially lower end of revenue growth, what does that mean for the rest of the industry delta today saying that it expects the fourth quarter revenue growth to be about 3% and the reason this spooked a lot of investors is not just because it was on the lower end but this is the second time since the initial guidance back in october where the company said, unit revenue growth is a little bit lower than we originally estimated at the same time, when you look at delta overall you have to keep in mind this is a company that is adjusting to the fact

that it is doling with lower fuel prices. yes, that's good on the cost side but also one of the factor nas people say, it could hold down not just for delta burr the entire industry the ability to raise fares in the future. and that's why not only delta was under pressure but the entire group delta and american getting the brunt of it today, down 7% and 8% one of the worst days since 2016 for dealt aire look at shares of boeing i point this out because borg like the rest of the market is under pressure and understandably boeing shares are feeling it because it was such a leader on the way up it's feeling that pressure almost as much as the market sells off over the last month, month and a half it reports orders and deliveries for 2018, early next we can. usually people focus on deliveries but also focused on what they say about orders and in terms of any sense at all with theky has not indicated that we might be seeing hesitancy from airlines about standing up and saying, you

know, we want these number of planes let's say, three, four five years down the road. >> when was the last time we married from boeing, phil? >> oh in terms of any kind of guidance. >> yeah. >> i want to say three, four weeks. and at the time dennis mullen berg they said they were the optimistic about the earning and revenue and the trajectory. >> phil lebeau in chicago. >> a tail spin for the airlines. >> so many puns. tail spin. and -- >> but i asked about the timing of it simply because of apple's time the last time we heard apple versus what we heard last night. it's a very different picture. >> the one aspect of what was said today that nobody seemed to focus on everybody looking at revenue they raised earnings growth by the way. but the thing that was interesting, they are expanding capacity which has always been the code word for, hey we don't like this in the airline world

because these guys overdo it last year, united as they expanded capacity and this is one of the names you loved last year and did a great job it moved up very well. and outpaced i'm looking at delta on the 52-week lows today hitting the lows i know it's always expensive, too cheap and how well they are run. but it seems this is a bottom time to look at this thing. >> i'm glad you mentioned the expanding capacity and how this is the sort of the playbook. i requested o asked phil that question isn't that what they always do, isn't that typical of the boom and bust? he said no it's different. because the they are segmented basic economy, economy plus. pay to for the bag and all these things you don't feel it as much. even though the base of the air fare doesn't go up because capacity is increasing they are making money on the ancillary things. >> it's still about efficiency

and we are bringing up good points as phil said, as pete points out, this is the second cut for the guys on revenue per available seat mile. this is a big deal for a company like this. the other thing is airline investors don't like lower quality earnings they may like earnings as pete points out they reanirmd eps but the revenue you is pushed down and lower quality earn based upon lower fuel prices process also interesting what phil pointed out which is true that airlines like the higher fuel prices because any pass on the costs. people don't believe it. but the lower fuel price has been a benefit here. they had a sale of business. that's what allowed the eps to stay in line. >> you mentioned apple when you think of apple and thousand dollar phones not selling well i think about discretionary spending you put together what with we heard from carnival cruise line. delta together today, marriott, biggest hotel operator by revenues trading down 30% year over year from its highs

you say travel is maybe not where you want to be i look at expedia. analysts expect year over year growth in 2019 an area that's likely to come down this stock trades 16.5 times i'm not certain you want to be long in expedia in an environment like this the inputs in the travel secretarie >> you bring up a good point but expedia is down 38% from the all-time high last summer. and had a precipitatous crop. >> are we debating >> we don't that much time do you want to put a bowe on it. >> trade ton the lung side as to where it bottomed out in the beginning of the year. >> back to you. >> coming up, the nasdaq plunging back into bear market today after apple had the worst day in six years some traders bet the stock could see an even bigger drop between

now and the end of the month we have the details. plus all the talk of the bear market has wall street on edge what does it mean to be in the bear market? guy adami brksown ea dthe basics more fast right after this

welcome back to "fast money. the selloff slamming the street again today as the nasdaq plunged back to bear market territory. but what exactly is a bear market just how long will it last guy is over at the plasma with the more you know. >> love the piano playing.

i learned how to play that on the piano. maybe i'll do it on another show in order to understand the bear market you need to define the bear market. i went to miriam webster, her dictionary i found a bear mechanic. it happens a to be a noun when the stock or commodity see as decline of 20% or more from a recent high. you say to yourself, seven didn't that happen see egg the s&p trading down to 2934040. s that's 20% effectively in the bear market technically yes but please slide i it, earl not really folks what does that mean? percentage drop in my world doesn't matter you look the individual stocks you have some stocks that are down 35% some stocks down 50% and not small stocks major stocks from the all-time highs you want to define it that's fine but for me it's not the percentage drop. how long does this typically last well we went to my from friend

ken sthoe and learned a typical bear market lasts about 13 months what lags and what outperforms guess what after the 13 months financials and tech outperform next slide, please i'll show you what i'm talking about bear market break down when the s&p fell rm 20 frers from april 11 to october 11, guess what happened the next six months s&p was up 30% financials outperformed followed by technology followed by discretionary. though on the cusp of bear market technically you have to look at things six months from now that are going to outperform i think pete would agree with financials and tech. dan might have some issue with it but the real one that's interesting me is discretionary. and six months from now if everything looks rosy and the president has his deal with president xi, the discretionary names that have been taken out to the wood shed might be looking like a great opportunity in rert expect hi, dan, sorry.

>> did your friend mr. ken show mention if bear markets are aassociated with recessions, preceding them is there any data mr. show has. >> i'm glad you asked. i asked myself this question almost every night when i go

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dan has all the action dan. >> total options volume was two times average daily volume today, actually on a notional basis quite a lot for, sr. a 140 stock when think about tp the company with the limited release did say they are reporting on january 29th the options market between now and february 1st imply about a $14 move in either direction about 10%. most of that is probably for the earnings move on january 29th. maybe about 7 or so percent on average over the last ten years apple has moved 4.5% in either direction. a couple of things when you think about the decline peak to trough from the highs, 232, not long ago, this stock is kind of nearing interesting long-term support. i think we have a chart since 2011 remember that steve jobs died in late 2011. a lot of skepticism about tim cook that's a log chart, a nice well

defined up trend in place. carter wirth laid it out that that 135 level late '17 break outlevel near 135 is decent support tp it happens to intersect with the long-term uptrend you may trading position attention for support into the 135 into the earnings release as maybe the worst news is out and maybe the company is more optimistic about the next few months or quarters >> you probably saw that action piece. >> some incredible paper out there. i think to dan's point, if somebody is interested in the apple, right now one of the more interesting trades would be -- and you have to really fully understand what you are doing when you do this but selling a put to the downside on the 135s or something with the inflated volatility knowing if it goes below or significantly further you own that stock minus that amount of money you sold that put for. but knows are the kind of trades i think we're seeing a little bit more of. is people trying to take a stab at this. because this stock has been turning. this is coming down from the 20 people have been trying to catch

this and have not been able to. >> it's implied volt tilt, the price of options in apple if they could bring that up that's the sort of trade idea that you want to do when you have a stock like this that is down as much as it is. look at how the price of options is still elevated. nearing multi-year highs if you have the risk tolerance and think about dipping your toe in the water selling an out of the money put is a good way to do it especially after the stock like this declined so much it's going to have that -- >> if you understand what that means. i know you agree. >> you're saying i don't understand what it means. >> or people don't understand. >> or tune in tomorrow at 5:30 and we go over it. >> my favorite show ever >> yes >> great though. >> triple tease. >> everybody. >> full show tomorrow at 5:30 p.m. eastern time. there you go upex final trades (indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math.

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as long as he or she accepts medicare patients. and three: these are the only medicare supplement plans endorsed by aarp. learn more about why you should choose an aarp medicare supplement plan. call today for a free guide. final trade time pete. >> going to the biotech world. boyne again. >> tim. >> news out there with the cfo but active vision is cheap despite a lot going on in the secretary sfwleer expedia guys i don't think you want to tip your toe in there. >> he des that on purpose. you notice database i have feelings obviously they don't matter on this show because any get stomped on welcome back by the way. >> great to see you mel. >> i missed you too. >> it's not sincere. i'm sincere when i missed you.

>> i missed you. all right. gees. >> what i didn't miss. >> what. >> the movement in new month mining is about to happen. back to you. >> that does it for us on fast see you back here tomorrow 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 save you money. my job is not just to entertain but teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. it's the economy, stupid