close today. >> definitely, as i mentioned, some of the stress indicators are starting to flair a little bit. interesting though we might get some fed speak next week, john williams new york fed may walk back some implications of the fed message. >> that does it for the "closing bell." i want to wish my husband very happy first father's day this weekend. to you as well that does it for us. >> "fast money" starts now. live from the nasdaq market site over looking new york city time square this is "fast money" tonight's trader lineup karen finerman, steve grasso, tim seymour and james mcdonald one of our traders says the market is confused, what they saw that was a real head-scratcher, we'll break it down straight ahead. plus chartmaster says look out below what is carter worth seeing in the charts later. we're going bargain hunting, the beaten down stocks that are worth a second look.

we start with friday fumble. toi stocks finishing session los and every single s&p sector lower, energy, utilities, financials posting the biggest losses, stocks field, yield fell, ten year falling back 1.44%. today's action has one of our traders scratching his head. tim, you're calling this market con confused, why is that? >> well, if you think about the reaction this week, first of all, i think the market has gone from focused on the long end of the curve to the short end of the curve. that may be accurate if you think about what has outperformed in the last couple days, since the fed meeting, triple q, nasdaq 100 and higher multiple stocks outperform triple q's outperform s&p by 2.7% the sense was as we were going into a period of higher inflation and concern around the fed and higher rates overall what were most under pressure?

what stocks? what sub sectors were going to take the brunt high-multiple stocks it was tech stocks the sense was we're in higher growth economic inflation environment and what will outperform and in fact the market has done the exact opposite not saying the market isn't on to something here. it may be in part to what i said couple weeks ago i said i thought the bond market long end of the curve might be going two steps out from the fed to actually lean on growth. but look, this week i think the fed got back some credibility in terms of their focus on inflation and addressing it. i think ultimately, the fact that you saw the parts of the market that shouldn't do well in a higher rate environment do poor ily -- poorly and yield curve flattens but on the banks disproportionate to what this news went. little head scratcher.

i don't think it will be the way they trade next week >> have you seen the blood in the kre, regional bank index down 7% for the week, karen, that's where you are seeing the hardest in terms of flattening of the yield curve and perceived impact on these stocks. >> right they also don't have some of the benefits what the big money center banks have even though their trading income is lower, it's still big, asset management is still very big. so i agree with tim's confusion in general, i guess, i think his characterization of okay the fed gained some cred italian there is gamed some credibility, there is someone watching inflation, if you look at break evens on inflation it peaked at the highest use of the word transitory right on that day, so that's come in a lot i think though, there are some bargains out there. i say buy when there's blood on the street even if it's your

own, it is my own, plenty of my own blood out there, i got a buy list ready to go i think monday we could see another sell off and i will start buying. >> give me one name. >> fedex, citi bank that's two. >> two for one >> i think tim's right, you have the short end of the curve, you have the long end, the 210 spread that's what hits the banks the most and that rolled over i'm not really sure, yeah -- >> no, finish. >> -- i'm not really sure what the market is overly concerned with, because i do see it as transitory, regarding inflation. lumber came in 50% from its high or 45% from its high recently in a handful of days. we're worried about a handful of things that will probably never happen go ahead karen. >> i do believe banks trade with the idea of 210 spread however that's not the way the books

are, jpmorgan brought their duration in, they didn't want to be taking big interest rate bets so i agree with what you're saying i think the expectation of how badly this will hit nim is probably over done. >> i think people normally trade banks off of that. whether it's changed or not changed. >> right. >> yeah. >> that's where preinterpercepti reality, people are selling value. i think value will do a heck of a lot better next week. >> and we can't forget the boulder comments make on cnbc earlier today introducing the idea he would be looking for the first hike in 2022 which is not really what people are expecting, james, how do you factor that into all of this >> well, we've had revision by an increase. 50% for core inflation by the fed in just the last 90 days data is moving quickly and the reactions to that that

data has to be as responsive to the comments about the regional bank index, understand, the regional bank index doubled in value from october post-vaccine announcements, and the rally following the election was unprecedented in that space as well as in small caps. i think that the unwinding of the bullish tone there's going to be some aggressive moves whether related to rates or more precisely related to sentimentships and the sentiment of the fed is going to quickly adapt to employment number that's may come in under 5% by year end inflation numbers that are spiraling and then the overall positive outlook for our physical health with regard to reopenings i think all of the things that caused the fed to take action have been waning as a result we're going to see some of these markets behave more normally relative to long-term trends.

>> and also having to respond to a fed that may not be operating on a auto-pilot mode or predictable mode bullar introducing the idea the fed would be responsive to data points, we know the fed is depend on data we said it won't be on auto pilot like the last taper. things have been so volatile, that the fed will be much more reactive to that point in time which is uncertainty in the markets. >> right use volatility, say you reference at least the market will be more volatile. we went into that fed meeting for this cycle, peak fed dovishness or fed put or complacency at 15 handle i think it will be very difficult for the fed to have a dovish tone in the third quarter. i think you will continue to see hot numbers. you have to see the labor market engage more. put more pressure on and i think you're going to get

through a period where ultimately some of this will prove transitory and we will get to a place, i think the fed's going to get a lot more dovish getting into next year but it does mean that i think it can be challenging. it sets up for a potentially difficult september. the market had a major, major reaction this week it was quiet on the surface. today the s&p gave up a lot of ground, until today wasn't painful on the headline was very painful below the surface. you have a case you put the fed in a position that fed put for markets for now is i don't see where that can come back any time soon. i think for the fed's sake they would be wise not to let us think it can come back any time soon and i don't think there's anything wrong with this, what karen said about banks, i welcome this on some level it's a case where fundamentals for money center banks which are going to have enormous leverage to this part of the economy.

yeah, 2-10s may be flattering, by the way, the short end of the curve that's where the flattening will come from if you ask me the bank's business are in great position and everything fed is doing will be good position for banks and valuation is interesting. >> james where are you finding value? who you are you positioning? >> it's a great question we go back to the sectors that have the greatest sensitivity to censorship and look there i like the personal pair industry and a lot names around consumer product focus basend on the reopening those names that will be contributed to consumer demand spikes, and the spikes we'll see in the stock market will be based on the climate change of going back to work, back to school, back to life, back to travel, i think the consumer goods products in individual names are looking hot >> yeah you got to start bathing

and shaving again, got to see people in person. >> talking to james specifically. >> well, he's remote somebody else is here on set with me. no, but also in bullard's comments he called it a threatening housing bubble that could be brewing, in the context of the fed fulling back purchase of mbs what do you think of that? things are very different in terms of income requirements, all sorts of things, versus the last housing bubble but for him to even use those terms is jarring >> yeah, a little bit surprising i do think this time is different. that time was the most different ever this isn't like that, right. i think credit scores are very different. i don't know i'm still relatively bullish on the home builder trade we've been in a supply/demand dynamic that favors them for a while. it really favored them a lot, i still think that dynamic is good i have exposure there. >> you still in builders

>> i am not but agree with that, i'm looking at the dynamics changing people moving out of the cities up to the country and renting in the cities and buying in the country, they're doubling up the demand issue is real and ongoing. >> tim what's on your buy list if there is a buy list for you. >> yeah, there is, first of all, so they're talking home builders, home depot, lowe's, home improvement, they've been trading down with some fear of higher interest rates. comps are mostly what killed home depot down 15% from the highs. the comps stabilize they get better the professional business is 45% of their mix i have to say this is a environment that's very bullish for them, everything about it, everything about the pent up demand and consumer savings, all of that is good. look, amazon, so this is a time where i think not prime day in a couple days which may be part of the 10% move in last 10 days i

think the market flags some of this consolidating back to last summer i think this is the best stock that's grown into, not value territory, but i like the call it's more of a hedge to what i was saying when i said you are seeing mega cap tech outperform. i don't think it will. i think the market after it burns through the reaction of the fed will get back to cyclicals and value, i like amazon standing out from other mega cap tech names. >> let's bring in the chartmaster, what are you watching >> before we get to some of the charts, i think it's a pretty good example of how the market is ahead of the facts. what we're seeing is weakness the last two days, but really, the kre peaked on march 18th, this is june 18th. the industrial sector peaked 3 weeks ago. the bks 4 weeks ago. the weakness of the last two

days, news related or fed-related or not has been under way for sessions and sessions and sessions, it's not out of nowhere what's happening, things like adobe and amazon coming to life. the market was ahead of the fed, if you will, or figured out what was coming, how that is, that's the genius of collective wisdom. let's look at a few things the first is a table what we know, if you look at the pandemic low, dropped 35%, in 15 months since gone up 95. there's been 5 plus percent sell offs, incidents where we dropped more than 5% six of them, in fact and the important thing is what is the average decline of those six incidents, it's 7.8% if you look at the charts remember that number, down 7.8 here we go first chart shows those six draw downs, sell offs, dips, corrections, whatever you want

to call them, since the pandemic low. next chart, this is the same chart but showing the trend line that's been in effect since the pandemic low this week we've breached that trend line for the first time. the next chart are the last two combined here's our trend line and our six draw downs, we are now below the trend line what reference point can we use from here. next chart puts together the trend line and 150 moving average. next chart is just the 150 moving average so were we simply to go down and touch this moving mechanism guess what percent decline that is, last and final chart, it is down 7.8% peak to trough again, of the six sell offs we've had tenners, nines, fives, 7.8 is the exact average, that's exactly where the 150-day moving average comes into play, i think that's carter

variety and to be expected. >> wow thank you. carter worth we'll see you later on, steve what do you make of his level. >> i like it he goes with the smoothie mechanism, 150 a lot of people look at 200 if we sell draw down hits the 200 day we're down percent that's what people are looking for looking to get back into value -- >> james how about you. >> the s&p performance since last year this time and recovery of follow through of vaccine announcement post-election has just been historic carter points out he has to adjust metrics to 5% moves, normally you can look at 10% moves after coming off a big market crash like that we have seen enormous amount of buying in the last five months and indication that could stop is somewhat of a surprise to people s&p support has come in again and again and again.

and you can count on one hand how many times it hasn't this is not your father's s&p. the s&p nasdaq hit all-time just yesterday, dominating the s&p, if we look at wakamatsuness in s&p -- at weakness in s&p we're looking at a broader scope of firms that may not recover as strongly so difficult to look at s&p in context of long term historical trends what we focus on is what all of the indices are doing, we're one day off the all-time of the nasdaq 100 so i wouldn't take much account into other index s until we see follow through on tech. >> coming up, we're going hunting for beaten down names. find out in our favorite friday night game and later. looking at nike ahead of earnings live from new york tesim market

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bargain hunting. time for trade it or fade it the beaten dow edition, down nearly 9%, steve grasso trade it or fade it >> i'm gonna say trade it. to keep in the same theme as carter worth, couple of draw downs that we've seen recently has resulted in the stock rebounding up over 30% i'm looking forward to rebound 20%, trade it. >> tim, where do you stand on dow? >> i'm gonna fade it i don't like fading it i'm going to stay consistent with my statements earlier, yeah, that's a big boom. i think you got a case where ultimately some of these cyclical and value-oriented companies, dow's not expensive here but the strength in the dollar and concern around industrial names i've not been

in the chemicals names like steve, i think there's better places to be, and this weakness doesn't look great >> let's move to walgreens down more than 8% since monday, karen, trade or fade it. >> trade it. actually long. that would be my book talk you know, we've talked about things that are low multiples that were out of favor this week, this is certainly one of them i do think at this level, 10, 11 pe, with a yield north of 3, closer to 4 actually i understand the macro wins that are, you know, talked about amazon for a long, long time i do think it's a reopen trade and i think this valuation is too low so with that said, trade it. >> james, trade it or fade it? >> going to fade it. i think the uber eats partnership is good but we're off almost 10% in a single week, that spells trouble, this move is too much with a stock with low beta of 5.6.

look at the technical levels tough time breaking above $56 on seven occasions in 5 of the 6 months in 2021 so having a difficulty breaking that all-time high. on the flip side, the break down below $52 seeing resistance in each of the first three months of the first quarter, that spells trouble i'd be a buyer in low 40s. >> next up mmm down 5.5 percent this week, tim >> i'm gonna fade this one i just think there's better places to be in the industrial space. 3m business has gotten interesting, they are refocused and more into data analytics around the core customers and but again, it's just not the place to be picking up a beaten down chart here where i don't think the chart looks good either. >> steve >> i'm gonna say trade this one. last time they beached the 100 moving average which it did

today was in january it rallied 13 to 14% off of that. the ten year can't get out of its own way on a yield this has a dividend yield over 3% there's couple reasons to buy this, i would buy it, trade it. >> caterpillar down 5.4% this year, james mcdonald trade it or fade it. >> this is tough for me because i love old, good, old names and cal pillar is that it has achieved saving from restructuring and increased profitability but this is a seller's market, despite low beta, i think there's low pressure than support. >> karen >> trade it. because dead cap balance you got to think that works for a little bit. looking at caterpillar versus copper, very correlated, in fact, highly, highly correlated to the dollar over the last six

months we had a big sell off in c commodities and if that bounces, un awill trade that dead cat boces well. >> all right coming up next, we got the final trade. stay tuned innovating, sourcing organic ingredients, testing them and fermenting. fermenting? yeah like kombucha or yogurt. and we formulate everything so your body can really truly absorb the natural goodness. that's what we do, so you can do you. new chapter wellness, well done.

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time for the final trade, let's go around the horn, tim seymour? >> yeah, i think fifth time will be the charm in amazon's attempt to break 3500. prime day i think will under score where they have a juggernaut in terms of their ability to keep folks engaged and e-commerce growth in their business, so, amazon >> james mcdonald. >> psq, if this is the end of a bull market, at least in the short-term this is where you want to put your money short the

nasdaq 100. >> steve grasso. >> lennar, two head wins, ten year and lumber, both have come in, buy, lennar. >> karen finerman. >> on the heels of that, i like whir whirlpool. >> that's it for "fast money." don't go anywhere, "options action" is up after this quick break.

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it is friday, you know what time it is, time for "options action", i'm melissa lee live from the nasdaq market site in new york time square, here's what's coming up. >> announcer: xlf'd, carter worth shows why it could only get worse for the financials as peak everything peaks. then, just do it or maybe don't do it tony saying swoosh is in to help you play through nike earnings plus, mike khouw takes his broken wing an