today? >> a short, sharp pullback the earnings look okay but it's all about what was baked in already. so i don't think earnings were the driver today it was much more about how extended the market was in the early term. >> we closed down 301 points which was well off the lows. that does it for "closing bell" today. thanks for watching. >> "fast money" begins right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. tonight a sea of red on wall street today but one top strategist says don't go running scared just yet. we'll tell us where the best place to put your money is right now. plus ibm soaring after hours, capital one under pressure to the tune of 4% we'll be monitoring those moves as those conference calls kick off. we start off with the market selloff and it was the china stocks sparking that sell-off. the economy is exasperated by

tumultuous trade talk and details of a meeting cancellation larry kudlow denying those reports right here on cnbc the dow ended down 300 points, s&p falling back and nasdaq falling more than 2% so just last week it feld like the worst was behind this market is the china market not priced in >> i don't know if we said the worst is behind us granted, i thought the s&p would stop at 2550 on the way up i go back and test obviously the rhetoric, i think the whole sell-off started with the chinese saying that trade talks would be somehow compromised if the u.s. didn't back off some of this extradition talk with the canadians about the cfo from huawei that sent the market down 150, 200 dow points that's what got things going what stands out to me, this administration, we've set it all

along, but larry kudlow coming on today just shows how focused they are in the market. >> so you think he saw the markets down. >> i do. kudlow sees it, i'm going to go on tv. >> i would have thought out of the blocks it was a negative day. you had china, lowest growth or slowest growth 28 years. you have the imf ratcheting down it was about growth or lack thereof. >> she had this weird or unusual meeting with top chinese officials warning that political instability of something that should be watched. all these things point to a weak hand on the part of china. >> look, china is not dealing with a strong hand that truly is at the heart of what i think this whole trade dispute is about. china is trying to gain greater control of technology and the internet and nano technology i would agree. china, if anything, they have to

be more concerned about maintaining status quo and control. they will do whatever they need to do. i think they have more levers at their disposal i think tax cuts will play a bigger role. steve pointed out the growth numbers. i think it all is just a wakeup call. >> the only problem is china used 40 of those levers basically and the latest has been the tax cuts. it's getting nervous for the market and probably for china that what they're doing is not working. >> does it make you nervous? it could theoretically impact the u.s. economy. >> it could. you could also see them be more driven to make a deal. the longer it goes on, the worse it is for them so to me i've thought for a long, long time trade is the number one thing facing this market right now that it pulled back 300, 400 points, look at the run that we've had. we are just back to where we were friday morning maybe, thursday afternoon so to pull back a little like this is fine

i think it wasn't until very late in the day that the vix really started to move at all. it ended up three. but i also think now we'll get into earnings and fundamentally where are companies. but they're still going to be talking about china and tariffs. we need clarity on that before this market takes off. >> we're getting pictures out of davos and the theme out of davos is called globalism. it couldn't be more the opposite right now, it's all about populism i think people are reminded there are political fights internally in every major country in the world and this is not something that's going to be solved in the short term i don't care what camp you're in, we are late stage in this economy. so the best news that markets have is that the fed looks to be at most going twice in 2019 based upon the data we have now. and we have nothing until june that's what markets needed they needed a break from the fed. >> in terms of earnings, can it be enough?

if we get decent earnings and outlooks given the uncertainties, can that be enough >> i don't think decent is good enough the numbers have been decent but stocks that have sold off to such a level that decent was good enough. now that we've rallied 13% or so over the last 18 trading days, i don't think decent is good enough at all. that's something dan nathan said heading into earnings, but by no means should these earnings take this market to the next level. >> look at where we were last week talking about netflix, talking about the bounce we said sell it off that bounce. that was the right thing to do as netflix is going to crater or come in, i think the market is going to soften up as well. >> when you looked at the intraday action, it was tech stocks that really felt it almost the hardest along with the likes of a boeing and a caterpillar, we did see

apple and semi conductors really they had the most exposure to this headline risk. >> they definitely took it on the chin things like alphabet, there was the article about amazon's presence and advertising leader which seemed to have more of an effect on alphabet than facebook amazon also terrible today that's a big move. it's come back a lot but it's still down from its peak the netflix valuation and amazon valuation are very different than the alphabet and facebook valuation. >> you're not talking about china exposure there for apple you can make the connection for semis, you can make the connection but this is a market that's taking everything down. >> but the market has made that connection so this was at least the some bit of a silver lining going into these earnings, anything cyclical had heavily priced this in i will say part of the good news in that 13% run for the markets was that hypercyclical banks

told you they were in very good shape and they should be trading at prerecessionary levels. airlines were telling you they had pricing power, their premium cabin is doing well. so we got a snapshot into people and i think the market's assessment that we were absolutely in a recessionary environment has been taken off the table. good news for equities i don't think stocks get away from you on the upside to be clear, i think there was so much bad news, so much doom and gloom, this has been healthy. >> regional banks are up 11% or so, financials are up 8% or so if you had to take some profits off the table given the recent run we've had, where would you take those profits >> in those two groups -- banks again then look at goldman sachs, had a huge run from the low that they made a few weeks ago to post earnings a lot of it predicated on the fact tangible book went up significantly. none of the problems have abated

at all you had an interesting interview today talking about the potential no m & a in some of these regional banks, so maybe that's out there big cap banks, i think you take profits. >> we have that pension fund rebalance going into year end and now it's going to cut both ways because you get month end rebalance as well. about $38 billion for sale now of equities. >> my favorite thing i saw today, positive u.p.s. comments. they're not seeing a recession the economy looks strong to them i would think they have a very good handle on what's happening throughout the economy so the markets having one reaction saying business is very different. >> for every answer, there's a fedex, though. as an investor, what do you believe? >> well, i'm long both >> good for you, you're hedged. >> i think that's positive for the outlook. >> mel, your point is well taken

and i agree with you karen, fedex to me trading at around ten times is a trough multiple for any environment i think with a great company with great cash flow and some of the best management i've ever seen, you know, that's what we're supposed to be doing is finding great companies where the cyclicality is priced in it can always get worse but i think that's our job. earlier today in davos, ray dalia warning the economy is out over its skis. take a listen. we're going to have a slowing of the economy not just in the u.s. but in europe and you're going to have a slower economy in other places. that's going to have an effect that will bring growth down to a certain level. in that notion of how monetary policy will be part of that, and at that same time politics and this disparity issue are going to merge >> our next guest agrees with dalio but says don't run for the hills just yet, add risk to your

portfolio. let's bring in rebecca patterson. >> great to see you. >> what kind of risk are you talking about? >> we're keeping our risk steady so we're neutral equities. we're saying it's not time to get out yet. i agree with ray dalio, how could you not? of course things are going slow but probably too much is discounted a eed and consensus estimates for growth have been discounted too even though we're getting mixed messages of fedex versus u.p.s., we think the u.s. consumer, which is 70% of the u.s. economy, you have lower gasoline prices, a strong job market, rising incomes, lower interest rates have helped with mortgages. i think the pending home sales, the mortgage applications are going to go up so i think the consumer in the u.s. is still very strong. so we don't want to count out the u.s. yet

but in terms of where this year goes, i agree, it's going to be slowing and we are late cycle. so you don't want to get over your skis, as you said, melissa, but i don't think it's time to get out of the skis and go into the lodge. >> so where in u.s. equities are you? it sounds like you're a big fan of the consumer. would you go for that consumer facing name, retail and those discretionary types? no, you like the consumer and think it's strong. >> retail has other headwinds in terms of everything going on online but i think just the comments we heard earlier today from adidas and the report we got last month from nike, even if china is slowing, the chinese consumer isn't not buying everything, they're by fur kaifurcatinbifur. there are great companies with great management that can still benefit from a growing class including china even with its slowing. so there are parts of the consumer we do like, absolutely. >> my quick question back to you would be consumer optimism, all

that is is an overlay of the s&p 500 and dow jones in broader terms. people see the market go higher, they feel better they feel better, they spend money. if we have another leg down in the stock market, would they pull back if you see another leg down and become a self-fulfilling prophecy >> i don't disagree with what you're saying although i think the part of the u.s. population that owns the stocks and watches the s&p every day is a smaller proportion of the economy than the whole u.s. economy, right? but the high beta consumer, if you will, is going to drive the market more. people with the wealth, with the big equity portfolios. we're taking a view that this year could go down one of two paths. we get progress on trade despite the headline noise at that, the shutdown eventually ends china, all the stimulus and more to come stabilizes things. em, emerging markets outperform but global stocks broadly do well if that happens, the fed raises

rates again and we're back to where we are in october so we're late cycle dalio is still right but on one path the other path is this doesn't go well. we also have the auto tariffs which we'll start talking about in the next few weeks. we have the debt ceiling which is coming. there is a lot that could go wrong. that's why i like having the u.s. overweight. if things go well, the u.s. will participate. if things don't go well, the u.s. tends to outperform in periods of stress because of the dollar, because people buy treasuries and boost the dollar and because of liquidity which helps it perform less badly than other markets. >> but you say we'll be back to where we were in october will we be in that box from the fed raises rates and the market freaks out >> if everything goes well, confidence improves, maybe we don't get 4% growth again but things are back to feeling good globally, the fed wants to keep hiking as the market prices it in, we start to get worries about

housing and autos and credit so we're pack to that place where things get vulnerable but for a different reason i know it's a little complicated, but the bottom line is you want to stay overweight the u.s. but having some emerging markets is attractive as well. >> where do you want to be underweight? >> europe, europe. oh, lord, stay away. we put out a white paper -- i'm not calling for the breakup of the euro, but the challenges facing europe both cyclically and structurally are the greatest they have fwhn my lifetime and i won't tell you how old i am >> rebecca, always great to see you. thank you. rebecca patterson. >> i think when you look at europe, as rebecca said, you have -- they're teetering on recession. japan teetering on recession china maybe, dare i say, going the same way i don't know if there's a lot to be feeling confident about here, because even if we perform on a relative basis, outperform the rest, i don't know if that's such a rosy scenario

if rates go up, emerging markets will get hit as well. >> you sound like there's no place to go. >> i don't think recession is off the table here the 2-10 spread is 15 basis points away. there's nothing encouraging about that i don't think anything has changed other than the market has run 13% in a short period of time. >> em will consume two-thirds of the manufacturers' goods by 2025 it'sdiminishing output by the g-7. so what rebecca was saying, if things muddle along better, rest of world versus u.s. is still the trade. that's been the right trade versus october it doesn't mean in absolute terms that's been a great trade. i think that's where you want to be but i think we have to remind people that there are great companies that shouldn't be trading where they are, and i think there are plenty of blue chip companies there right now. >> a huge catalyst next week in the form of facebook i think facebook has done that from 125 to 151 or so which was

where the price was when zuckerberg testified in the spring i think that will be the catalyst for the next leg lower. i think steve agrees we'll retest that december 24th low. coming up, if today's sell-off has you worried about more selling ahead don't be plus ibm soaring after a big beat the conference call is under way as we speak. we'll bring you the latest headlines. and later, activists on the attack two big names taking on ebay pushing a $30 billion e-commerce giant to spin off some of its core businesses. karen says the company should be worried. she'll explain we're live from times square in new york city. much more "fast money" right after this we're ok. just ok? we got a saying here. if the brakes don't stop it, something will. that's not a real saying. it is around here. i wrote it. just ok is not ok. especially when it comes to your network.

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value at the company karen has been doing some digging. what do you think? >> yes well, you know what, if you're a ceo whose stock hasn't done that well the last few years, you don't want to hear from starboard but you really don't want to hear from elliott because they have a ton of money. i thought it was a very compelling thesis that they laid out and showed where does look a stubhub would trade, how valuable that business is and what value is it being part of ebay classified, how valuable that is those two alone are worth where ebay is now. they also really focus on -- they didn't say undermanagement, they called it i forget the exact word, but it wasn't particularly flattering to how ebay, the main business, has done over the years of the you've got to think the ceo should be concerned. remember, going back three or four years, ebay insisted they should still be with paypal and ultimately changed their mind

and spun off paypal. so there is a map here for how this could go. i thought it was very compelling the spinoffs really could up lock value i bought some stock today. by the end of the day it wasn't even up that much. i think the risk/reward is actually very compelling we'll see. the letter is not as hostile as it could have been, for sure however, this will not be the last that we hear from elliott if they don't want to make any of these changes we'll see -- i'm unclear whether they can actually get into a proxy fight or not i'm not sure, i'd have to do more work on that, but you have to be concerned if you're the ceo that elliott is calling you. >> back when ebay still had paypal as part of its business, at that time even though it was the target of an activist investor, carl icahn, said no, no, no, we're not going to do it and yet they did and unlocked tremendous value here we are again. >> i feel like this conversation with ebay comes up once every six months i know we had this conversation in october

glenview was rumored, smart guys that know how to add value these guys are also talking about more capital returns so it talks from $3 billion in buybacks let's to $5 billion. it may not be great for the long-term value of the company. >> you know what's interesting, what karen said about paypal was the right thing to do. i know you can't prove the counterfactual but have you ever done the opposite and said if they didn't spin it off, what would it be worth now? >> ebay with paypal. >> i don't like the idea of getting rid of things that are your assets. i think it's a quick solve and you get the spike that you got today. >> they're not selling it. maybe selling would be much higher, but spinning if you're an ebay shareholder, you're going to get it if you spin, you're going to get it >> we don't know what it's going look like, whether it's a spin or a sale right now, right

>> although i bet elliott would argue in a sale -- they do argue in a sale, stubhub or classifieds would get a much, much higher value. let's say it gets a market value, that it's not getting right now under the umbrella of ebay. >> so the question is for the investor at home and for me sitting on the side of you, if it's a sell, a sale -- >> seems like steve has a question. >> i am asking a question. i can understand the spin-off, i get that valuation but for the investor at home if they sell it, is that -- >> but you the investor will also get part of that sale you will benefit from that as well. >> although the company has the cash and can do what they want with it. if you spin it, then you get the shares, you can do what you want with them. i'd be inclined to hold them i think they're undervalued under the umbrella of ebay. >> the stock basically got cut in half, 46 down to 25 all through '18. you're seeing the bounce now

what you have going for you is a couple things. valuation isn't ridiculous most analysts have cut their numbers and price targets october 30th when they reported so maybe you have some further upside here. but again, until earnings, maybe you get that upside, but the business has been not declining, but it has been slowing. >> for more on ebay's activist battle head over to cnbc.com check out shaz res of ibm right now. the stock is soaring we'll tell you what investors are so excited about. and it is the one chart, the one chart everyone on wall street is obsessing over we'll explain what it is and why it's so important to this market right after the break. i'm melissa lee. you're watching "fast money" on cnbc, first in business worldwide. much more "fast money" right after this the unknown beyond the horizon. that was once our frontier. but today, a new frontier has risen.

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welcome back to "fast money. " stocks posting their second worst day of the year with the s&p falling back into correction territory. today sparking fears the new year rally may have come too far too fast bob pisani is at the nyse with the latest hey, bob. >> the fundamentals have put a halt to the rally but the technical picture has been stellar. the decline line has been steadily marching toward and is close to a new high. 52-week lows, which was a major problem at the end of last year when almost half the s&p was at a new low, they have essentially disappeared as the market has risen. what's missing here are breakouts on the upside. for example, there's only three stocks in the s&p 500 that hit

52-week highs today. we've got to do better than that for a real breakout. still, the trend lines have been strong after dipping below the 50 and 200-day moving average on december 3rd, that was the start of the december market volatility the s&p crossed over its 50-day moving average last thursday before dipping briefly below it today. generally positive the last several weeks. the vichx was 17 and went to 36n december 24th and back to 17 before moving up to 20 today really today is the first significant up day for the vix since that december 24th close despite today's drop the uptrend is still intact. that up trend began on the december 24th bottom, was tested on january 3rd when the s&p dropped 2.5% to seriously break that uptrendinuptrend, we'd have to drop below 2610

if we stay at the trend line or even find some support here that would be a real positive if we break decisively below that, i'm talking 2610 or around there, a lot of people will be eager to say we'll retest the december lows. there's a lot of that talk around you know that, melissa, back to you. >> all the banks are saying that, bob. thanks, bob pisani at the new york stock exchange. this is all happening just as we're hitting the thick of earnings season. in terms of the ones that you're watching, i'm curious, which ones are you saying that could be make or break >> are we talking about the overall market and which stocks are rallying back and earnings are creditical right now i think you have to look at some of the luxury brands that have been outperforming we're waiting to get some of the auto guys that i think will reconfirm where the consumer spending is. right now if these guys are reaffirming 2019, that is very, very bullish because two months ago we didn't think they were getting there. >> karen. >> i don't know.

some of the names, like a home depot, i think, is indicative of so many things, housing, retail, consumer, all of that. we're not going to see that, though, for another few weeks. >> really quickly, caterpillar on the 28th, which is next tuesday, that's going to be fascinating. it's going to be fascinating to see what they say and what clarity they have given the backdrop of this china trade thing. >> i think it's what we got, not what we're going to get that's more important all those large cap tech names i think are really interesting they did the heavy lifting all the way up we have to have them to do the lifting again. our next guest says despite the sell-off today and this vulnerable market, there are two stocks that could be on the cusp of a major breakout, chris is over at the plasma to go off the charts hey, chris. >> hey, melissa. let's first start with the s&p and talk about where we are and put this in context. so we had 60 days down and we've had 16 days up, and it puts us

at that 2630 level exactly where we were at the start of last year we think we're in a range here i think the 200-day near 2740 is likely to cap gains for now and i think that 2500, 2550 level will be good support so within the context of 200-point s&p range, what do we want to own? we want to focus on leadership we think nike here is a great example. this is a stock that has already taken out where it failed in october and november of last year, and it's a stock that's making new highs versus the s&p. this is a leadership name. sticking with consumer, here's chipot chipotle, another example. it already had its bear market, down 60% over the last several years. putting in a big base heres are starting to break out above that 475 level and, again, importantly outperforming the market the whole time. we want to own leadership. what's not an example of a leader right now aerospace is a questionable

group here this is utx, has not participated in this rally, making new relative lows versus the s&p. remains below its downward sloping 50 and 200 we think this is a vulnerable. chick with consumer, nike, chipotle, two great examples >> chris, why don't you come on over and join us here at the desk thank you, shelby, for bringing the chair in >> welcome, sir. >> so bob was talking about all sorts of technical indicators prior to you and i saw you over there assessing bob's work i'm wondering if you agree when i start thinking about the markets, i think about so many people saying we should have never been at the december lows. maybe we should not have been at the october highs either in the markets. >> the price is the price, right? so what the market prints, the market prints. i don't think 52-week highs is an appropriate metric. we prefer to focus on one-month highs. last week about 70% of the s&p

made a one-month high. >> 70% >> 70% when you start to get readings over 50%, your forward returns over the next three, six and 12 months tend to be better than average. so we welcome some of this expanding breadth over recent weeks. >> that utx chart looked so bad, is that good at some point it's really along the bottom of where the relative performance of the s&p -- >> i think we're at a spot where the s&p backed up to resistance so we need to focus on what is exhibiting leadership and what is not defense is a group that has underwhelmed us. look at honeywell and lockheed they really haven't shown up conversely, consumer has been pretty good, especially some of the restaurants, some of the foodwear stocks. so there are clearly pockets of leadership i think in markets like this that are largely range bound, you've got to focus on what is leadership and avoid what's not. >> but the market relative to itself, so we get extreme drawdown in december and therefore we've had almost a v

i could make an argument that we do have to trace it back from at least october. we're in a downtrend line that has not been broken to the upside am i glass half empty or is that right? >> no, that's true the slope of the 200-day is sloping downwards. so the primary trend is still down i thought last week was a good start. that's a start but there's more work to do here there needs to be persistency. >> do we have to retest the december lows? >> i think the term "retest" is widely overused here number one, retest is never fun. i took my share of retests and they're not fun. >> it wasn't so much fun. >> i think we need to be very careful what we wish for here. i would argue 2500, 2550 would be a successful retest, even if you don't go all the way down.

remember, this won't be a fun process. iwasn it wasn't a trivial drawdown i don't think the bottoming process will be trivial ooifrt. >> chris, thank you. nike is fascinating. i think nike closed around $80.50 or so that was the level when nike came out and announced the colin kaepernick ad. you know what happened after that, gave a lot of that back. now we're within a whisper of an all-time high on a tape that's been until recently pretty negative 26 times forward earnings makes its expensive in this environment and nike continues to grind higher. it's very hard to fight against that given that it's traded well on a lousy tape. >> i not only think that we retest but i think that we break it i don't think we'll get that retest, 2450 or 2500 -- >> does that mean everything he said was wrong >> no, no. >> what do you like? >> it's everything where do we bounce from there. i think we trade down to 2200 in the s&p. >> check out shares of ibm

they're soaring in after hours session. the company conference call is taking place right now plus more bad news for housing as stanley black & decker air forcesdeck er issues a dire warning more "fast money" still ahead.

welcome back to "fast money. we've got an earnings alert. ibm shares up 7.5% after better than expected earnings the conference call is going on right now. deidre joins us from san francisco with the latest. >> that's right. ibm shares are popping the bigger picture hasn't changed much and that is a return to shrinking revenue and slowing growth and strategic imperatives. the acquisition of red hat is expected to close this year and that could boost sales on the call the cfo talked about how it could lift all of ibm. >> from a value perspective, in addition to the growing red hat business itself, we see an opportunity to lift all of ibm by selling more of our own ibm cloud, and by selling more of our analytics and ai capabilities on open ship across

multiple platforms >> investors, though, may be looking for organic growth as well from ibm's other big bets like watson artificial intelligence that it has touted for years and put billions of dollars into it's part of ibm's next gen performance. lisa ellis points out strategic imperatives grew 3% in the quarter from 13% last quarter. cloud 2 only grew 6% versus 18% last quarter she said that the after hours action may be a knee-jerk reaction and some short covering as overly negative narratives on ibm for the year ahead. >> real quickly, any word on what happens to jim whitehurst after the deal is closed >> not yet i saw one report that says if he has a big future at ibm, that

would be positive for the stock. so we'll continue to listen and i'll bring you anything if and when i hear it. >> deidre, thank you. what do we make of ibm and this sush surge in the after-hours session. >> i thought they weren't ail to get to the cloud, et cetera. i didn't think they'd become that quick enough nor in a sensible fashion where their gross margins are impantact. if you see that slowing, that was supposed to be the knight in shining armor for ibm. if that's slowing, this remains still my secular short and to me you can have these bounces but nonetheless i think you're just playing these for sell the pops versus buying something for a longer term. >> steve talked about counterfactual earlier i think but for the red hat acquisition and some of the comments they made, this quarter the stock action would be

unchanged to slightly lower. the revenue growth isn't there, there's no eps growth. people point to valuation. that's the reason to buy ibm for the last three years and it's been in a word wrong if red hat can pull them out of this malaise, that's great it's a long way from pulling them out of malaise and where we are right now. >> be careful what you wish for. if you wanted ibm to move away from this, essentially a lot of cash, buying back stock, giving you a nice healthy dip to be in a growth company, they gave you what you wanted. they're going to an area that's ridiculously competitive so i think you're going to see revenue dprogrowth i think the company will be cash starved for three years. they're going to struggle with r & d in some of their core businesses. still ahead, stanley black & decker getting hammered after lowering its outlook is this a sign of more pain for the housing market we'll explain.

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" alarm bells ringing for housing stocks stanley black & decker plunging 15% after weak guidance point to higher interest rates and trade tariffs adding pressure to a slowing housing market the xhb home builders etf, the construction etf both down 2%. is there still more pain to come for this beaten down group we had sherwin-williams last week it just seems like things are piling up on the sector, grasso. >> when you look at it, everyone talks about higher interest rates. interest rates to me have pulled back so i don't know if that's necessarily -- and now powell is taking a pause so interest rates seem to be backing off. so that doesn't seem like that's the reason lumber costs have been slashed, so that's not the cost that's not the reason. i think it's just universally, people hate building stocks right now. >> why is that is it because consumers are worried and so they're not going to buy a new home? >> all that goes into the

psyche, yes. >> this housing starts number missed badly it's the lowest since november, 2015 prices are actually down, which should make the affordability, but that's the other problem they're still not affordable and there's not enough housing stock. >> a backward-looking number, though, during what was a difficult period i don't know the thing that's interesting to me as relates to stanley black & decker and if you compare it to ibm, the bar was low and they beat even though it wasn't the best beat, it was okay for a nice pop. stanley bounced very sharply off of its low, 25% maybe. so what might have been good enough three weeks ago, today was not good enough anymore. so i think it depends on how high the bar is coming into earnings even more than what are the earnings themselves. >> that's exactly right. to me if you told me what they were going to report, quarter was okay, full year guided in my opinion it wasn't a down 15% guide for the full year.

if i had those numbers ahead of time, i'd say it's down 2.5%, 3% on a lousy tape. in the context of the bounce that it's seen, now it's making sense. if you start to connect the dots, that's why i believe it might be another test lower. >> so should we be worried about home depot and lows? stanley black and decker sell through retailers. >> i think sherwin-williams and stanley black & decker belong in the same place yes, to the extent that you want to try to feed that through to home depot and lowe's. but i'm not jumping out of those two trades in a weaker home market, i think there's a lot more renovations, a lot more improvements. the consumer is very healthy their pro business is doing very well i think home depot is one of the best run companies in the world. after today's nosedive the options market is betting stanley black & decker's isn't over yet. >> so we saw 14% the average

daily put volume in stanley today after the earnings announcement some of that was profit taking on some bearish bets that had been made last week. options markets were fairly complacent going into it but what we did see was a purchase of a thousand of february 115/105 put spreads for $2.60. so it has to go below that 115 strike price by the $2.60 they paid and targeting that 105 strike which would be 10 plus percent from where it was today. i think the fact that options premiums were slightly low last week speaks to the complasence we may have seen. >> check out options action at 5:30 on friday. philip morris just did something that might have you thinking twice about investing in the space

much more "fast money" still ahead. see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade ♪ hawaii is the first state in the u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place

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money. at that back owe stocks all lower. morgan stanley criticized the altria invest in vaping company juul philip morris' ceo explained why earlier today. >> we have no plans as i explained many times currently for the cannabis business. the science, despite all the hype, is not very established yet. there is a lot of talk about the positives and there certainly are, but there are also negatives that we all need to understand the second part is the economics is an industry that is still fragmentied with no emerging technology or brand. thirdly and importantly, we operate in worldwide markets, so not every country is on the same page in accepting the principle, not even the decriminalization

so we have to take all of this into consideration. >> so cannabis and e-cigs were supposed to be huge growth areas for tobacco stocks is that narrative going up in smoke? what's interesting about this ceo's comments is his sister company doing business in the united states altria is making investments in those two businesses philip morris, i like to think of international smoking, smoking outside the united states, wants to step away, even though that's where cannabis -- that's where the growth is for cannabis. >> a little ironic that a cigarette company is trying to say that, well, we don't know if it's going to be good for you or the science and this and that. but i won't get into that. what i will get into is the juu accusation is buying it at 40 times. they're only buying at 35% until they actually buy out a controlling stake. the bottom line is they do need some areas of growth i think juul and noncombustible.

there's a ton of technology in cannabis it's nowhere near the size of the cigarette industry but there are brands and absolutely technology clearly altria thinks so and i think they're right. >> tobacco has to do something, right? they're dying. there's less smokers on a daily basis, there's less smokers, but the problem with vaping, there's going to be fda restrictions on that when we start to get to flavor restrictions and how much deeper and more popular that gets cannabis is a place universally people are seeing as the real growth areas i think it's a little short-sighted on pm's bias to say that's the one that's -- >> they don't feel as much pressure in the united states because maybe -- and i don't know the answer to this question but maybe their volume declines aren't as sharp overseas in emerging markets where restrictions and warning labels an things like that on cigarettes aren't as big and obvious as here in the united states >> yeah, look -- >> i'm not sure what the answer is there. >> juul ate their lunch.

it's amazing they were able to come in here the tobacco companies, the reason why they're good for cannabis is these guys are all about compliance if anybody is going to lead the way -- i should just say they are going to have credibility in certain parts of washington if they're actually in the sector but again, tobacco companies, the parallels for cannabis are not the same the reason tobacco companies make sense here is because they have the distribution, they have the packaging, they have all the production it's just a different product. >> up next, final trades ♪ (vo) here's a question. was it necessary to create a luxury car more teched out than silicon valley? with a cockpit fit for aspaceship. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one.

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time for the final trades. go around the horn tim. >> so apparently it was an interesting chart. i think nike is fundamentally very interesting gross margin enhancement china 31%. it's one of the few companies that's doing it wholesale and dtc. i hate that it's 22% off the bottom but i like the company. >> karen. >> yes, ebay, we talked about it earlier. it was up today 6%, started out t 10%. i bought some today, i'll probably buy some more. >> steven, it's been selling off, netflix that is, it's been selling off so i think you could get a couple of bounces and

continue to make sales into any strength. >> you call himsteven like the full name. >> she throws it in in final trade, i like. >> it didn't i. >> mcdonald's, earnings on the 30th or 31st is extraoinily rdar compelling. >> that does it for for us "mad money" starts right now 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. okay okay, so it was a little too easy can only rally so much on the idea that the economy is slowing, so we don't need to worry as much about the fed.