adjusting lighting, as well as checking news and weather. the toilet will be available later this year. >> but does it heat and spray like japanese toilets? which are the best. >> either way, i think too much. keep it simple. >> i think you can innovate a toilet. >> an entertainment seat. >> an entertainment toilet. >> look how useful that would be in our prep. >> that's it for "closing bell" today. >> "fast money" begins right now. "fast money" starts right now. live from the nasdaq, i'm melissa lee. tonight on "fast," the oil rush is on. crude up another 5%. it is on its longest winning streak in more than a year and a half and one trader says it is about to go even higher. plus the dean of valuation is here and he says stocks are cheap. he'll tell us where to find the best deals in the market first, we start off with a make-or-break moment for this

market right back level, it was at its breaking point back in september. after a dramatic fall and even more dramatic bounce back from the bottom, a 10% move higher from the christmas eve lows, the stocks make a run for 2600 once again. will the market make it out of the so-called danger zone? dan. >> well, listen, you set that up as kind of a dramatic setup here >> you should have said maverick or viper even. >> the 2600 level was really, really important because from the october highs we had this decline. we got back down there it was a level we bounced at it had been technical support for a little bit here we are, we're right back there. one of the things that's really important, i think you want to look at a couple of sectors that led on the way down. we've been talking about bank stocks in particular let's talk about the xli, industrial stocks. two very cyclical groups here and really just remember what was going on

there was a bit of a growth scare back then in december. so when you look at those two charts, the xli and xlf, they're approaching breakdown levels here to me if they get there and can't get above there and they fail, you continue to sell rallies. i think it's a tough spot to continue to press lows, but xli, xlf, they're really keys the s&p 500 has to get above 2600 and stay there and become support. >> well, he's too close to missiles and i'm switching to guns, mel. >> i got it. come on, people. i was all over viper. >> i have no idea what you're talking about. anyway -- >> the bottom line is i think the fed takes you out of the danger zone if you believe the fed minutes were consistent with what powell gave us on friday. that's a fed that's not p predetermined to be robotic and follow protocol rather than the data i think we've all speculated very well, you started it, mel, talking about is this a guy that had to follow a script, stick on course as powell learned about his messaging. but what i think we learned from

the fed is a couple of things. the market may be actually overstating the economy and the weakness in the economy, and that's actually a fed that to me might be ready to jump back into the fray the most important things are that asia to me last night -- i think if asia starts torecover and i'm not talking just about china, but look at korea, which is both an industrial exporter and obviously the epicenter of a lot of the tech worries. look at the dollar, the dollar weakness signaling i think clear for crude, which we talked about at the top of the show and emerging markets. >> the dollar to me is the key to this whole thing. we had a very weak dollar today. although i'm not convinced that the fed is out of the picture. my read on what the fed said is they want the 10-year yield higher they want a steep yield curve. now, i don't know if the market understands that and can digest it but when you're bumping up against 2600 and you have the manipulative rate saying we want rates higher on the 10-year,

that could be a problem. >> they don't control the 10-year. >> they control the yield curve because they can sell long maturity by two years. >> i guess so. >> and you had the greatest guest on last night, mike wilson has this guy been dead on or what he's been fabulous he was talking about a rolling bear market and is now talking about a rolling bottom market. we've had a couple of great days in a row, call it three days in a row that were spectacular. we've lost a little volatility out of the market as well. i've got to tell you something, to me it still comes around to the trade war and that's really what the markets -- i know you said the dollar. everybody here might have their own opinion. i just look at what the headlines are each and every day. now that powell read his script and stayed to his script of what he wanted to project out there he went offscript before because of that, it's trade war time everybody is looking at that depending on how things go, we've had a couple of decent

days in terms of what we're hearing coming out of that and that's what's propelling this market. >> you sound skeptical. >> i probably am more in the bear camp. >> one of the things i would say is sentiment obviously overshot to the downside in december so we've had this reflex move back up to a level that we were all comfortable with and hoping it gets above the reason why i think the banks are so important we know they start reporting, citigroup, on monday if the xlf can't get above this level, this resistance level on good news, if there is any good news, then you've got a real problem. then you go back to selling every rally. >> they have had volatility, though, so you expect some of those banks, those that are more involved in the actual markets themselves, they would probably be in a great position to maybe surprise people a little bit to the upside, maybe. >> i have i feel like we've been waiting for the surprise to the upside for a long time >> 100% agree.

>> the playbook for bank earnings has been actually the first couple of days, the banks sold off then it took a week to ten days into earnings season before people realized that the banks were delivering very good numbers. i'll say this quickly about the banks. they have been outperforming in a lower rate environment -- excuse me, they were essentially underperforming as rates went down and actually found a little flight here. as rates start to move higher again, although the yield curve has steepened, i think this is an environment where banks have suffered. >> earnings will be key. we're heading into the thick of earnings season the next couple of weeks. >> yes, and we've already had a lot of the warnings. it makes it much more difficult here at 2600 or wherever you want to take a look at the banks at we've priced in a lot of the downside and now we've rebounded and priced in a lot of, okay, maybe it's overdone there. i like the banks i still like them because i happen to think the yield curve will steepen over 2019, not flatten out. that being said, these are still

stocks if the stock market itself doesn't digest that curve steepening that well, i think the banks get hurt so it's a lot trickier we've talked about it the last several weeks, about how this market going forward is much more of a proactive traders market rather than something where you can buy and close your eyes. >> this is not the setup that you want into earnings you don't want a 10% bounce off the december lows going into earnings you're much better off selling off into the period. >> i'll say this i think the negative feedback loop of the fed and market expectations is something that the market needed to break out of if you look at where we are today, again we're back above that fed day, whatever that was, three weeks ago. i think the negative feedback loop for the market were, yes, we've had 10% essentially in ten days is something that would worry me under normal circumstances except for the fact that -- so i am worried but the negative feedback loop seems to have broken and i think that's important. >> next week we're going to have netflix report and i think that's an important one.

i don't usually say that i usually don't talk about faang. >> why are you pointing at mel >> high valuation did accelerate to the downside. netflix is up almost 40% from its december lows here and these are the sort of names where i can see beaten down stuff that underperformed all last year do just fine. i don't think stocks like netflix will be afforded that same sort of wiggle room if there is any disappointment in those names -- >> so you think because it's bounced back as much as it has,th almost done >> i think it goes down. >> our next guest says the market is facing a major test right here and there are two key stocks that could help determine the fate of this rally let's go off the charts with chris veronis. >> hey, melissa. listen, this is no doubt a very big spot

up 10% over the last ten trading days what i really want to focus on is this 2600 to 2640 range this is the 50-day moving average appeared alnd also the e from the highs down to the lows. so 2600 to 2640, very big level. what for us will determine whether or not we break out or roll back over we have to look at the internal characteristics of this market one thing we see consistently, when markets are coming off of bottoms, good lows, you get a big expansion in month highs new one-month highs tend to surge coming off a low we haven't seen it yet i think the threshold here or the bar here is high if we're looking for a couple of names of how we move from here, the first here is microsoft. obviously the largest weight in the index. really key spot here, right back at the 50 and the 200. that 105, 106 range is also the

50% retracement from the high down to the low. key spot there and then i think most importantly, the most important bank stock in the world, frankly it's been a relatively feeble rally for jpmorgan off the lows. right back to 104, 105 microsoft and jpm we think are the two bellwethers that dictate where this market goes from here. >> chris, why don't you come on over to the desk shelby will bring a chair in jpmorgan is not in maga. >> so if they report, whatever the numbers are and the stocks go down, you're going to be worried about the markets? >> i forget who made the point, but we're ten% o10% off the low into earnings. the bar here is high we're only ten days removed from a lot of fear out there. if you look at classic bear market rallies, up 15% over about a month or two is not uncommon so for us to say, okay, the trend has changed and the first

half of 2019 will be impressive, i think there's more work to do before we can embrace that story. i forget who it was that mentioned the shape of the yield curve, i think we've gone from 9 on 2s and 10s to 15 to 16. i would have expected given powell's comments a little bit more of a robust response there. i just haven't seen it yet. >> this is definitely in your view a sell a rally market. >> i think this is an area where the market meets a lot of resistance here. >> i'm curious, if you look at the market and we break down here, what's the next level? i could make a case that 2200 is your next major support level. do you see that as well? >> i think we've got to remember some of the reference points here we are still 10% above the 2347 lows a week or two ago that has to be your first reference point. what i'm most concerned about, do the internals start to improve? typically on these retests or

undercuts, you see fewer stocks breaking down, positive things happen in other parts of the world. tim, you've talked about em quietly a little bit better. that would being about to watch on any rollover here. >> you singled out microsoft a lot of people are watching app apple. the stock has been acting better of late. >> apple is interesting. right now if you look at analyst recommendations on apple, you have the fewest number of buy ratings in 15 years. so the sell side is as bearish as they have been in a decade. i think that's interesting this 135, 140 seems to be pretty good support on apple. i would be far more inclined to embrace that one and it frank low hasn't been hit very hard, a microsoft, adobe or salesforce. >> so the breadth of the market over at least this rally period, it's been actually quite extraordinary. i've heard people talk about it in a bullish sense and as a technician you should like that. do you say, hey, everything was so oversold that this had to

happen >> over this ten-day rally, i would say we've had two days that i would characterize as especially impressive internally what i'm looking for, that second chart we showed, the percentage of stocks making a one-month high you get that above 50% and that's a low bar you get that above 50%, that is your all clear sign that enough stocks are participating in this move. >> chris, thank you. pete, i'm going to pose a would you rather to you. would you rather apple or microsoft? >> i own both. >> right >> but i think right now in terms of where i see microsoft, i still think that's the better stock right now for upside the reason i say that is i think -- excuse me, i think that apple will be a little bit under pressure for a little while. i think that's going to extend a couple of months, especially with some of the warnings that we're hearing. i think unfortunately the market will not digest that right i think microsoft outperforms. >> if you had to pick a tell in the market, a stock, which one

would you pick >> i think the semis if you look at taiwan semi today, look at the recovery in asia i talked about. the semis are up almost 2.6% i want to see semis still in a downtrend so the technical guys can say you're running into the same downtrend resistance certainly from october but you can argue back to july em always bottoms first. again, names like tencent is up since halloween. expectations of a deal mean there's more reason to run >> they said they saw significant upgrade to sk hien as well as samsung. >> for me if i'm looking at the u.s. market, it's got to be the banks. as much as i like them and think they have some upside here, if they fail here, then i think that takes the rest of the market with him. >> that's what he needs to see

he's not saying it's going to happen >> i think that you guys are all silly. i think it all comes back to maga we lost the apple in maga. i think microsoft is so important. if you lose microsoft you're going to lose the market if you lose amazon, you'll lose the market. >> how about netflix >> we already talked about it. >> microsoft and amazon have not been key to this recovery. >> but it's $1.6 trillion in market cap i don't think the market will get back if we don't have the leadership of maga it just won't happen i'll telling you you can talk about your energy, you can talk about your banks, they just don't do it. >> come on, guys, don't be silly. >> of course >> no maga. >> no maga, no market. crude is up 5% but just how long can the euphoria last traders will weigh in.

plus the dean of valuation is here and he'll tell us what's cheap. and is this beaten down group about to show some life? we are live from new york city much more "fast money" after this always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

don't get mad. amazon prime video so when you say words like... show me best of prime video into this... you'll see awesome stuff like this. discover prime originals like the emmy-winning the marvelous mrs. maisel... tom clancy's jack ryan... and the man in the high castle. all in the same place as your live tv. its all included with your amazon prime membership. that's how xfinity makes tv... simple. easy. awesome.

welcome back oil jumping 5% today, now 14% off the december lows and back above $52 a barrel it's time to may a good old-fashioned game of -- higher or lower. >> so pete is first up. >> the momentum has been good on oil. i'm going to say higher. i tell you what, if i look at my portfolio, i'm exposed i am loaded up right now on energy, so i'm putting my money where my mouth is. >> at what point do you say i can't hold all these oils. >> i'd probably get rid of the highest beta names but i think i could hold on to the bigger names like exxon. >> higher or lower >> for me it's higher. there's a couple of reasons.

the reasons for me are weaker dollar, number one but number two, saudi arabia today said they're going to tap the bond markets in the second quarter of this year now, what are you going to do if you're saudi arabia and you need to borrow some money you need a higher oil price, so i'm going to bet with that. >> a minister said they would cut production by 10% this month in order to create higher prices. >> i'm going higher too, so cue the green, the crowd, thewhole thing. i do think oil is going higher oil tends to overshoot on the way up this is a story that looked to be shot on supply and demand you've had a recovery in the concept of the global economy. you've clearly tied up some big supply issues. if wti breaks 54, i think you have another thrust higher >> it's amazing we were just talking about oil going so low that it would cause pain in the

credit area and that may be something that we have again and a retest of those high or lows, especially if we see the conditions that led to the sell-off a month or two ago. you may have a little higher look at the xle up to 65 and then a lot lower look at that xle chart right there. similar to the conversation we were having before 40% of that is exxon and chevron. if you get rejected in the xle at 65, this thing is going back and testing the lows back in the low 50s. >> on our new year's show we did our predictions for 2019 and i said oil would be up 20% for 2019 so a rare case of being right very early in the year bye-bye. >> for more on oil and the big move head over to cnbc.com i'm melissa lee. you're watching "fast money. here's what else is coming up on "fast. pace yourself, jay it looks like investors are too when it comes to one of the largest spirit stocks.

we will explain. plus, the man, the myth, and the legend the dean of valuation is here, and you won't believe what he's saying about how cheap this market is ght rinow. that and much more "fast money" right after this break

welcome back to "fast money. stocks now up 10% from its christmas eve low after a rough quarter that sent the market careening in december. that also brought a big valuation compression. dom chu is back at headquarters with what stocks are worth now hey, dom. >> well, it's been a pretty strong rally for stocks since the market bottom on christmas eve. as a result, stock market

valuations have also staged a bit of a comeback from depressed levels with the overall market we took a look at forward price to earnings ratios in late january of last year, the broader s&p 500 traded at around 18.7 times expected earnings today that number is closer to 14.9 times that's around a 20% drawdown from peak valuations inside of the last year. now, from a valuation perspective, the sector that got absolutely crushed the hardest was energy, which needed with a forward pe of 26.7 in early january last year. it currently trades at around 15.6 times that's a 42% drop in relative valuations industrials traded at a forward pe of 20 in mid-january last year and now it's 14 that's a 30% drop. now, even a blue chip component, say like a boeing, which admittedly has been one of those stocks tied to the u.s./china trade talks and sentiment, it

traded at 29 times forward earnings a year ago and now trades at just below 19% a 40% drop melissa, no matter what stock or sector, lower prices an lower profit estimates, now will traders find value picks or is more compression still to come big question for traders back over to you. >> thank you, dom chu in the newsroom i don't know what metrics you guys have. i think it's important to think about it in terms relative to itself boeing relative to itself historically. >> boeing on a free cash flow yield even relative to itself got really crazy cheap if you look at the nasdaq, we were somewhere around 20 times i don't think there's any question we've seen valuations get to a level that's attractive even after you've gotten back to a 10% rally, you can make an argument here. we need to wait and get guidance

from companies i still don't believe we get 7% earnings growth on the s&p in 2019. >> we just talked about microsoft so we have an s&p 14 times, microsoft trading 23 times where eps growth is expected to massively decelerate if you have a full year cut then that stock becomes a lot more expensive very quickly my view is some of these that are trailing rich to the market, i think you have to wait for 2019 guidance. >> for me it's more of a value versus momentum play here. we might be in a period where value is target to take over look at iwd, which is the value etf. that might be something that outperforms something like dan's maga you get these cycles over five-year periods. that's what i would do. >> i look back and on december 12th, i was looking at my notes, we had a little thing we were talking about safe buys because of what we were seeing in the marketplace. i looked for names that had huge contraction. you look at their pe levels or

where they came from and united rentals gets beat up look at mohawk, another one of these names that was sky high and gets beat up of the single digit pes but i give you one other that seems to have gotten lost nvidia this is a $292stock that everybody loved when it was a 90 pe suddenly it gets down to 130 and everybody hates it they have growth i think that they're going to still be able to report growth so i think some of those other two names, even if they are just even with their earnings and show no growth, they're trading at single digit pes. i think there are opportunities still out there in the market. >> i think a name like nvidia is a bit dangerous and i'll tell you why. eps is expected to be flat sales growth is expected to be single digits. when people were paying 90 times for that -- >> they were doing it last year too, though. this is last year. >> i know. listen, it was a great, great

trade. but these are also very cyclical stories. if you're hitting the wrong end of the cycle -- >> but you're looking for names that absolutely -- tim talked about it earlier and how he likes the semis and maybe they're starting to turn he's probably right. you look at that name, when it was trading at 90 times, everybody loved it now that it's trading 18 times, it's hard to find buyers. >> people thought crypto was a growth market. >> there's been a bit of a hangover there the cyclicality of this conversation is critical to me fedex is the ultimate cheap stock and one of the most cyclical companies in the world. bought some fedex over the last week and i feel comfortable with that name. that's a great company that to me has been pushed around by expectations of global growth. dan shakes his head. stay in your lane, bro. >> it's not maga it doesn't matter. >> basically he shakes his head the whole show >> no one thought that apple was

going to have the dump that it did from 230 down to here. it did it for fundamental reasons and then it did it for macro reasons. if you have -- if you lose microsoft or any of those mega caps that are $800 billion in market cap, this is my point for months now then this market has real problems it's fallen appearnd it can't gp >> if you were wondering where to find value in today's market, there's nobody to point you in a better direction than the dean of valuation he joins us now from san diego great to see you. >> good to be here. >> we've been having a fierce debate in terms of nvidia. overall in the markets, what sort of valuation metrics do you use, because so many people come on and say pes have been compressed forward, what do you look at? >> i look at a forward-looking number called the equity risk. basically i back out from stock prices and cash flows what investors are expecting to make.

at the ending of 2018, that number was close to 6% there were three years in the last 55 where you've had a higher number. one was in 1979, the other was the end of 2008 and the third was 2011 if you look at the cash flows and level of interest rates, stocks look more likely to be undervalued than overvalued. that said, i think the big concern for the coming year is expected growth. the earnings for the next two quarters will be key on whether stocks can sustain themselves. if you can go through the first two quarters without major shocks to earnings, i think the market is poised to recover. >> so even though the market seems according to these metrics like the market is undervalued or more likely to be undervalued more than overvalued or fairly valued, it's still a wait and see market for the first half of the year >> i think growth was some substantially. expectations have come down so much over the last year, the question is whether we've adjusted enough or there's more to go. there might be more shocks that

bring growth down even further at the moment given what people are expecting and even in terms of lower growth, i'd be more likely to buy stocks than sell them. >> be the tie-breaker on our debate on nvidia and whether or not its value in this market -- it doesn't have to be a comment on this individual stock, but i know you like tech stocks in general and see value there. >> i did buy nvidia at the ending of last year because it's a stock that's been on my radar for a long time, but not at the price it was trading on. my limit buy came in at 145. i'm still waiting to get back to 145. i might never get there. but i like the company i mean i think there's a real chance growth could drop off next year but long term i would still buy the growth of that stock i also like boeing i think it's a stock that got punished for all the wrong reasons. but let's face it, you can substitute for apple you can't easily substitute for boeing i don't think you can tar all

these companies that have china exposures with the same brush. >> so the two categories with value in this market are beat-up tech stocks and companies exposed to china what really caught my attention is you even like general electric, which is sort of -- it has china exposure, but it's also a story in and of itself in terms of being a turn-around story. >> ge has been so beaten up that at this stage if the management can chew gum and walk at the same time people will think they're geniuses it's a stock that i'm buying because people don't expect it to do much i think it still has some solid businesses that if it plays its cards right, you could see a significant recovery in the stock. >> professor, is it cheap? is there value there i've tried to make the argument there's a sum of the parts argument is that what you want to do or do you just think it's about chewing gum and walking? >> i think in a sense the quality of the management is how easily they can disentangle the

parts. it's very difficult to break up the parts because they are all connected to each other. you need a pretty solid management team to be able to separate the parts and get the best prices you can for each part that is going to be the test for management is whether they can do that. this is not a turn-around story. this is a story disentangling a company and selling off its pieces for the best prices they can get. >> professor, thanks so much for joining us always a pleasure to speak with you. >> thank you >> if i see larry culp, i'll see if he can walk and chew gum at the same time. do you agree with any of the professor's picks in terms of value? >> sure. nvidia, i want to make one more point here, guys just like it overshot to the upside for year after year for three years, there's a didn't chance, even though it's been cut that it overshoots to the downside. >> has it already overshot >> we don't know so the point is it went up 1,000% and now it's down 50%

could it go down 70% i don't know i think it's really hard to attach some kind of funk evaluation metric just to a sign to what your view is about it. so i think that stocks like this will overshoot to the downside we saw it in names like square where sentiment just got overly, overly optimistic. coming up, check out kb home rallying the company conference call is under way. we'll tell you what is driving the stock up. plus, let's get a check on our cramer cam and there is jim talking to the incoming and outgoing ceos of constellation brand after th sckatto was a major buzz kill today. we'll bring you those comments when "fast money" returns. so even when she grows up, she'll never outgrow the memory of our adventure. unlock savings when you add select hotels to your existing trip. only with expedia.

welcome back to "fast money. check out shares of constellation brands down 12% after the company cut its guidance the outgoing and incoming ceos spoke to jim cramer moments ago. >> there's been a lot of, i would say, negative press and hyperbole about it, but the truth of the matter is that the canadian government has just come out and said that the run rate currently is roughly $6

billion, which is exactly what we said it would be. we have a roughly 20% to 30% share of that. and we're anticipating that canopy is going to be a billion dollar in rev lienue business in the next 12 to 18 months >> did he say bill dollar revenue business, canopy he did, right? >> yeah. >> we should note canopy shares did soar after piper jaffrey initiated coverage on the space. some analysts are concerned about the balance sheet of constellation brands because of the commitments they have to make to canopy. >> that's right. and the rally today in canopy today was about reasserting a commitment that actually there's going to be enough cash flow to pay dividends and enough cash flow to buy these warrants that will give them north of 50%. these guys said a lot of things today that were very bullish for cannabis the growth opportunity of a lifetime, these guys are early in look at what's going on with their core business, low-endi

wine that's why they're going to growth. >> is it bullish for constellation? >> i don't think it is what is constellation doing? they're buying into the cannabis industry why would i want to buy constellation? why wouldn't i buy into the cannabis industry? this is one of the secular growth stories out there at this point in time. so i'd much rather be in the ones that are going to be bought than the buyers. >> originally i would have disagreed with that. now watching this play out with cops la constellation and how poorly it has reacted, constellation seemed like they were humming along and then suddenly ever since they started putting the money towards that, which was the growth, and i don't think it was the wrong thing, i think it was the right thing to do, but their own stock -- >> 40% since october. >> yeah, absolutely been beaten down. >> so there are real questions about its ability to pay everything. >> although, again, i think that's -- that today was

reaffirmed and it's one of the reasons why you had one stock down 10 and one stock up 10. >> the pot stocks have been on fire to start the year so what are some of the big catalysts for 2019 tim will head over to the plasma. >> let's be clear. this has been a rocky ride for the cannabis space if you think about the last month, we've talked about markets that have rallied. this is a market that over the last, say, three weeks has actually had an enormous run you're up about 35% essentially since the start of the year across the sector. so what's going to happen in 2019 first of all, what we're going to do is weed out the winners. i think you're going to see enormous bifurcation between brands and not just having a big multi-state operator but the companies that are executing that's what we want to see we've had to work through this enormous backlog of rtos and i think there's more to go on the public side, but that's good news in 2019, guess what, check marks the spot there's going to be more legislation that is going to be a major driver for a sector. that's obviously the east coast which looks like it's about to

flip new york is certainly rushing, i think, to legalize new york is certainly rushing to even beat new jersey to it so when the east coast goes, you've gauot a major demographic story to get behind this growth story. i'm less concerned about run rates in canada right now, i'm concerned about the united states i'm concerned about california, which is the biggest market in the world right now. bottom line, consumer euphoria, this is one of those things where look at what happened with this farm bill and the hemp component of the farm bill and the footprint that now wellness companies can put into, i'm talking about big multi national companies, companies that are in the wellness space or cosmetics space, gets you into food processing and ag processing this is the sophistication of an industry that is growing up. yeah, i think there's enormous catalyst it was healthy to see what the market did the public markets got way ahead of themselves, probably got too knocked down and actually created a great opportunity here. >> top two picks, tim, right

now. >> i think canopy, if you think about their positioning both as a global company through constellation brands, the fact of the matter is they do have a footprint in the u.s they get into the hemp and the science side of the business i think a multistate operator is somebody who can execute let's watch some of these guys who raised a lot of money and have to follow through we're getting some good signs here and i think some of these bigger names are some you can stay with. >> tim, it's bk. you mentioned the wellness companies. do they suffer the same fate that constellation brand does? should i just be buying canopy and the producers? or are wellness companies a good buy as well? >> well, the fact that basically hemp acbd, they have to determine where you go from plant to product but you've going to have an opportunity for l'oréal who's already in the business through body shop and

other places, but whether it's whole foods that's going to be a major distributor or walgreens or places that -- this is going to be a whole group of people who have no interest in anything psycho tropic, but whether it's hemp or wellness based, i would take a look at some of these names. >> be sure to tune into "mad money" tonight with the constellation ceos at the top of the hour. coming up, check out shares of kb homes jumping after hours. we'll tell you if there's still time to buy. plus small cap stocks with huge gains one trader made just more than a $3ilon mli bet that could come crashing down. more "fast" still ahead. by the people?ed uh... correct! you don't have to choose, 'cause, uh... oh! (vo) switch to the network awarded by rootmetrics and j.d. power. buy the latest galaxy phones, get galaxy s9 free.

this round's on me . hey, can you spot me? come on in! find your place, today, with silver sneakers... included with many medicare advantage plans.

call the number on the screen now or visit getsilversneakers.com

welcome back we get an alert on kb home the stock is higher after an earnings beat. the home builder did say that the average home price dropped 5% in the fourth quarter check out lennar shares rallying earlier. the company announced it was not giving guidance because of the market conditions. take a look to the chairman explaining that decision on the exchange. >> even a great war room with

great analytics can't divine what the market is going to do we've seen this year after year. it's just a very quiet time of the year in the home building world. as we come into the end of january and into february, we'll start to get a better read on the market and that's when we'll start to come out with more defined guidance going forward. >> now, you would think that if a company said we're not going to give guidance because the market conditions are not good and it's slow, it would be a negative thing for investors but you own the stock. >> i owned it before these comments. >> do you not like these comments >> i'm a little concerned when i hear that coming from the ceo. i think there's got to be some sort of vision this isn't like the industrial names when they have all the concerns about the trade wars with china and all the rest of that it's far different than that so it is a little concerning i think what plays in their favor still is we were all concerned about the fed, all concerned about interest rates as they were rising and all the rest of that stuff and because of what we're seeing right now, i think the potential is there for the builders to actually

have a little lift to the upside. >> to his point, they have no visibility between now and the spring selling season and that's actually really disappointing except for the fact the stock ripped today i think a month ago you power pitched these names. >> or fast pitched. >> there was no fundamental reason to buy them other than they were so beaten up, lennar was trading at 70 a year ago, in january was down 50% so to me this is the sort of trade that you want to sell into you don't want to be buying it here. >> you don't want to fade this >> the biggest concern here, if interest rates are going higher, these guys are going to get crushed. they don't have any vision, why do i think i'll have any more vision take your gift and go home. >> if i was shooting the bird -- >> it doesn't apply to this one. trade it or fade it, higher or lower, those things apply to this take your pick. >> i think there's two things going on with home builders. first of all, you've had rates come down a little bit so it

gave a little life to people to short cover across the board the lack of visibility in the sector is partially a function of changing taste by consumers affordability is not there and you're seeing people rent. right now i don't think we've changed that cycle even though there's a ton of bad news in there's a [leaf blower]ws in you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out.

and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. don't get mad. tap one little bumper and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty mutual insurance. ♪ liberty. liberty. liberty. liberty. ♪ comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue.

beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast.

unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. welcome back to "fast money. small caps are on fire up 13% from the december lows but one trader just made a $3 million bet that small caps could crash. dan has the options action. >> mel, put volume was 1.5 times that of calls and the

outperformance in the russell 2000 or iwm has been pretty impressive, up 7% on the year versus the s&p that's up 3% or so so today there was a trade when the stock was trading just above 142. a trader looked out to may expiration and bought 7500 of the may 135 puts paying $4.35. down 8% on may expiration at 130.5. if they are an outright bearish bet, they could also be a hedge against a long basket of small cap stocks i want to make one point about that outperformance this year. look at the chart of the iwm, the one year it goes back to some of the things we were talking about earlier in the show. it's gotten right back up to this breakdown level from earlier in the year and then the double bottom low where it just cratered in december so this is a really important technical resistance level i just want to make one point looking at the five-year chart here, we obviously saw the

outperformance on the upside in 2017 and most of 2018. the crater here. but look at the intersection between the breakout level from early last year and the uptrend that's been in place over the last ten years this level down near 120 could be some really good technical support. so sometimes when we're looking at some of these strikes and trying to figure out what's going on, 135 down to 120, you know that's about a 10% move or so so sometimes when investors are looking to put on some protection, they're using the technicals to help them form those strikes. >> pete, where do you stand on small caps >> i tend to be with dan on this one, a little protection on the downside and looking for downside pullback on this. that's a big move over a short period of time to the upside i agree with dan, i think if you break that 135 level, this thing could easily be in the 120s. >> higher or lower on small caps >> lower i think it's been an extraordinary rally back the same risks that are out there, the same conversation we had at the start of the show works for this. >> trade it or fade it small

caps >> well done i think you fade it. even if you're long, i think the lesson here is you should be buying puts at this point in time when volatilities come down, you make hay when the sun shines, that's what you do her > nt,inal 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. 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.

with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month. less than a dollar a day. his secret? selectquote. in just minutes, a selectquote agent will comparison shop nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncan's wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford.

final trade time pete najarian. >> you plot up that bbby tonight and that big spike to the upside retail is on fire. target is going higher >> we talked constellation i don't think you need to buy this tomorrow. i'm long the name, i'm not happy today but i think this is one of the best guys in the beer and spirits space. they have proven that for years. >> b.k. >> i found the fed minutes fascinating today, though most people don't most people don't want to talk about the dollar but it went lower so i think gold is coming higher. >> our friend tony dwyer comes on the show and he said after a crash like that you get a reflex rally. i think the s&p has limited upside here over the next month. i think you sell it. >> i'm shocked

>> i don't know. >> how do you feel about maga. >> stay in your lane, bro. >> that does it for us see you back here tomorrow at 5:00 don't go anywhere. "mad money" with jim cramer coming up next 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 a very special san francisco edition of "mad money" welcome to cramerica other people want to make friends. i'm just trying to save you some money. my job is not just to entertain but to educate and teach you so call me at 1-800-743-cnbc or