>> all eyes on netflix today but my takeaway for the week, goldman sachs reported the best year by some distance in a long time yet still declined 10% this week it is not like it was an expensive stock, nine times pe, so it is tough for everyone. we're out of time on "closing bell." thank you so much for watching "fast money" starts right now. live from the nasdaq market site overlooking times kwar, this is "fast money. i'm melissa lee. tonight's lineup tonight on "fast," netflix or chill. shares plunging by the most in a decade and erasing almost two years of gains but the move has not one but two of the traders dipping their toes in. we'll find out why plus a bitcoin breakdown in our bitcoin baller, b.k. is here to give us his thoughts and later tail of two tech trades why two of the biggest names in the space are ready to

head in very opposite directions we start off with another shorp sell-off to end the week the nasdaq dropping 3% to close at the lows of the day the index down more tan 15% from the record high and look at the moves across markets just this week the s&p down more than 5.5% and treasury yield dropping and commodities and economic recovery trade getting crushed the s&p dropping more than 10% so what exactly is the market trying to tell us. tim seymour, what do you think >> i think the market is trying to grapple with where margins are really going to be for corporate earnings, ultimately what we should be paying for stocks and how aggressive is the fed going to be and i don't think -- we could debate what the fed is going to really be saying this week i don't think this week's fed coming up is going to be very critical i think it is ultimately a case of what investors are willing to pay for stocks and in an environment where either way we all recognize that we have inflation. it is not going away

and i think that is really the debate here. we have seen specially towards the end of the week where first of all you look at mall cap stocks, you look at high growth stocks, they're trading the same way and then we start to question growth in the last couple of days of the week when we start to look at maybe flattening of the yield curve. what is happening to commodities. still stocks or iron or down 15% in two days across the board so the real question i think what is the multiple to pay for stocks when we're seeing and hearing in the earnings that we've had companies that are blaming margin pressure on everything from labor costs to supply chain to the dollar netflix starting to talk about the hit to the gross margin. to me the dollar is also a head wind more fed is more volatility and every asset went higher. >> we threw commodities in the chart there at the top, brian

kelly, because we're asking the question what sort of retirement is this in are the marks telling us to prepare for economic slowdown, this as the fed gets prepared to hike >> yeah, i think that is what the message is we've talked about this quite a bit. but the fed has two choices. they could either tolerate inflation, or they could raise rates to a point where the economy slows. and hopefully they don't raise rates enough so much that the economy goes into recession. right now, the stock market is telling you, hey, wait a second, we might be looking at a recession. the fed is likely raising rates at the exact wrong time therefore to tim's point, not only do we not know what multiple to pay but we don't know if earnings will hold up. so you if get a entire economy slowing down and a nonaccommodative fed that is a tough environment for risk assets. >> grasso, what do you think >> yes, so, yes, it is all about the fed as far as rates and what

the multiples should be paid but it is interesting when you look at a lot of the charts, they're trying to push stocks back to the pre-pandemic level so that february high before they fell off a cliff is where a lot of the charts have leaned. so what does it mean you have china and russia and geopolitical, you have the fed, you have the rotation, value has grossly underperformed growth in -- for years. for over ten years and now when value is lifting its head people start to think is that a bubble i don't think that is a bubble a lot more to come to the down side for growth. a lot higher for value >> do you agree, karen >> i do. i think when you're in a environment like this, with the fed doing what they've said they would do, i think that that rotation kind of, it is not a gravitational pull, but for someone like me it very much is.

and to tim's point about what do you pay for stocks, what is the right multiple, that is a great question but i also sort of step back and think, you know, sentiment is a pendulum and it doesn't stop at fair value. it swings way past and so the challenge for me is that i look at things like that i would think about, all right, do i do a docu sign against some value longs and then i see, wow, it was at whatever, $230, $40, not very long ago. but that might be a useless piece of information the question is right here, is it still very overvalued and can you make money on the short side from here against some of my long stuff that isn't working this week for sure i like the banks that is not working. and then what do i want to buy and then on top of that, i layer this question of, well, what a terrible week we had and have we seen the pressure from margin calls yet?

or are we going to see that a little bit next week so that is sort of another thing. so i have a buy list i really haven't, you know, started using it yet i'm anxious to use it. but i think i'll get a chance to buy things cheaper on monday than today >> i think the market issue is an interesting one in terms of market calls on professional traders but also the retail trader and if they start getting queasy, from this volatility, they could be selling, too they were the margin alibier on the way up and they could pressure the markets lower, tim. >> -- and yes we spent a lot of time also talking about passive flows into equities, in etfs and that which comes from liquidity. so we haven't even begun to see that and i'm not sure that we necessarily have to.

but i do think there is a lack of understanding look, one of the things that is really interesting about a trader's mentality, maybe even a less sophisticated trader and that could be anyone on a relative basis to wherever they sit in terms of experience but i just, people seem to be more anxious when there is a trade they were in and the stock actually, they're missing out. so a stock is moving higher that they sold or they believed in and they often chase those on the way up they seem to be overly content when stocks that they own have been brad trades and continue t go down or they cut tlheir flowers and keep their weed. i know it feels like there is blood in the street. if you look at where stocks are and the oversold conditions on a relative basis, i think this is through the october 3 low and whether it is measuring relative strength that again on a short-term basis tell you more they're indicative of telling you a change in sentiment. the s&p is still 30% above

pre-covid levels and i remember back in 2020 we pondered when will stocks get back above their pre-covid levels when will we take oust covid and get back to normal most of the stocks an i mean starbucks, nike, target went more than 50% through those pre-covid levels and you go back to a chart like amazon which looks like it wants to screen back to the pre-covid level. so i think this gets back to the place where sentiment is and i think a lot of people are very concerned really what was real or what was not and certainly in terms of stimulus, the fed had a lot to do with what was not real. >> b.k., it sounds like you're thinking to heck with trying to figure out the valuation and the right multiple for the over markets and go for very specific

ideosyncratic -- since we are celebrating our 15th anniversary. when rare earth stocks were really hot. >> yeah. i mean molly corp, that is what mp used to be called what a fantastic trade that was. and i'm back into mp so here is the logic is on it. we're in a rough geopolitical landscape and most of the rail come from china and you need to make batteries and all of that it is unlikely that you're going to have china have 90% control over that. there is currently one publicly traded rare earth mine in the u.s. that is the mountain pass mine, m.p. corp is the stock so for me it doesn't matter whether or not the multiple is right or earnings are right, there is going to be a geopolitical event where the u.s. said all rare earths that

we have here, we need to start producing these things and by the way, corporations, you can't buy from china any more. alternatively, the situation could be what happened the last time and china started to restrict the supply. so either way, the supply gets restricted and i don't have to worry about what the fed is going to do. it is just kind of thisid ideosyncratic trade. >> netflix plunging 22% for the worst day since 2012 cutting the valuation to just under 35 times next year's earnings on par with the likes of disney, costco, "the new york times" and vale resorts. two traders took the opportunity to buy shares today. karen, you're one of them. i never thought i would hear you say i bought netflix today but here we are. >> i know,here we are. and you think i would have learned that after last year not paving attention to the three-day rule to my great

detriment that i would have done nothing today. but i couldn't help myself so i bought a tiny bit of netflix. just around where it closed. and i haven't had the chance to buy it at this valuation now maybe that is a chance i don't want to have but i do think that people are just puking it out i like seeing all of the analysts downgrades, that sort of fuels the puke further. and i think we'll see more momentum to the downside and, you know, some of the things that they cited, we should be a little concerned about however, i do think in the past they have been underpromisers and over-deliverers and we could see that again and a quick rebound. so i think this sets up better than it has in quite sometime. so i want to buy more. i couldn't help myself i had to buy some. >> tim couldn't help himself either apparently >> yeah, well, look, again,

re-set on sentiment and expectation and i think a change in the story now has fully come through. this is not about sub growth and category leadership. this is about higher arpu, average revenue per user in some of the lower income but higher growth markets and then free cash flow, we're saying that with netflix, even in a world where they said $2.5 million on first quarter subs when the street had them substantially higher than that 6 to 7 million but the content spend does have leverage over time and still think they will have outside of 2020, their first year of positive free cash flow in '22 and by 2026 this could be a $10 billion a year free cash flow story without necessarily the kind of sub growth that i think the street was at yesterday which was 25 million plus for the foreseeable but again, i think it comes back to a much more reasonable

expectation. the big question on margin and it is operating margin concern, do they have the pricing power as they now talk about competition for the first time almost in some sense that they're a little bit weary of it even though reed hastings almost invited it the market is not getting smaller, it is getting bigger in the market we're not concerned about their reason for being and they still are a category leader and i just think it is time that you've re-set expectations that is what made today interesting. >> coming up, we're heading to the burbs. where the chart master said the good times are over for costcoond home depot and some are calling this the matt damon top, the details on why trait ahead as we head to break. check this out the nasdaq celebrating 15 years of "fast money" with this message on the tower overlooking our home, times square today thank you, nasdaq. stay tuned well, would you look at that?

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welcome back to "fast money. like much of the market home depot and costco have taken a leg down in recent weeks but the next guest said the stocks are a good place to hide amid the

turmoil. let's bring in carter worth. >> hello a couple of things and just specific to home depot and costco, when you have a lot of red as you do today and you have two big stocks that are barely down, it begs the question why are they not down with so many other stocks it is free will. people could choose to sell anything, because they're trying to derisk on their ome home depot and costco had less selling pressure today and that is important i have a few charts and tables leptd's see what we could divine so the first is a table. and this is the setup, i think that is important. if you just sort of simply look at how far below these two stocks are from their 52-week high relative to the s&p, of course you see here that costco is down 16%. home depot is down 17%, 18% and the s&p is down only 8%. so we have the precondition of worst than the market over the

past several weeks now, let's look at a chart or two and then conclude with the first thing i said about today's strength so the first chart is costco 571, it is peak and down at 481 and that is down 16% and right to just above the rising 150-day moving average look at home depot it is the same circumstance. it was 411 down to 349 and down to and slightly below the 150-day moving average so if you were to plot these two securities, the third chart, this is the two stocks as though they were one security, a basket, about $600 billion in market cap and the basket, the two stock equal weight basket is down exactly to the 150-day moving average where rebound potential is high. and then the final table which is really just the tell all and

it is a good segue from the first table. today costco down 25 basis points and the market down almost 200 so you have what i think is an excellent setup of proceeding weakness there is almost double the market they're down almost twice the market from the 52-week high but in a day like today, exhibiting tremendous relative strength if you're looking at a place to put money in the long side or to maybe hideout, home depot and costco. >> carter, thank you we'll see you in a few minutes on "options action." steve, i'll go to you. are these two places that would you like to hideout in, would you play for this rebound potential as carter puts it? >> i would not in costco and home depot when i look at this. my premise is that people want to push traders they want to push these back as hard as they can to the pre-pandemic levels now granted costco and home depot have reacted and changed people behavior out of the

pandemic so i think they get a premium. but think costco could trade down to $325 if you're really looking aggressive or $390 that is a deep discount and home depot could do likewise. could get beat up here looking at level of 245 so maybe 300 to split the difference. >> costco has a forward p.e. about the same as the netflix forward p.e. as we mentioned in the first segment of the show. i don't know if that said that netflix has gotten much, much cheaper which it has or costco is overvalued, karen and i wonder where you tand on this. >> well from my book i have this tiny toe of netflix and no costco so, i do have exposure that i consider similar, which is target, which is a big position and i have some walmart. all that said, i would rather, if that was the question, which

it sort of wasn't, i would rather own netflix at this multiple >> all right up next, a crypto collapse the bitcoin baller is here of course with one key chart that tells us where this market is heading. stick around, much more "fast" right after this quick break youy vrbo ski chalet. with endless views of snow-covered peaks. (laughter) a stove that inspires magnificent hot cocoa. and a perfect ski-in ski-out. but the thing they'll remember forever? grandpa coming out of retirement to give a few ski lessons. the time to plan your get together is now. find it on vrbo. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

mark your calendars for a special series next week here on "fast money" from the amc aips to the trends to the way we trade over the past year special coverage of the retail revolution starts monday here on "fast money. bitcoin tanking today down 14% breaching the $40,000 mark dropping to the lowest level since july it wasn't the only

cryptocurrency under pressure. ether selling off. we have b.k. on the desk today so what do you make of this move >> yeah, it is pretty ugly and pretty painful so a lot of people ask me, well that was the matt damon top and is that it despite how cringe worthy that ad was and i'm sorry, matt, i know you watch the show, but it was bad, i still don't think that the crypto market that this bull run is over and one of my key indicators that i always look at is addresses and if you think of addresses as like facebook's monthly users it is network effect and what we're seen is active addresses and we're not seeing a falloff in addresses like we saw in 2018. in fact it is holding steady so that tells me there is still active users out there, and the network is being used despite the price drop and that to me said this is just a painful correction now what would change my mind if we do see the addresses tart to

fall off but for now that is not what we're see sog i think it is a painful correction. >> the matt damon, we're referring to when he started become being the spokesperson for crypto.com, a commercial that debuted in october. we have the graphic there you could see and that coincides with the latest top for bitcoin. tim, how feeling about your holdings >> well, i mean, i got to tell you, matt damon looks very tired in that commercial i feel like he was as exhausted as the chart was b.k. is talking about adherence and network effect i would point out that i think institutional adoption of crypto assets, a block chain technology and bitcoin as a proxy for the sector is only beginning the move here is very much in line with the beta that the asset class trades with overall markets and in fact, at times

has led the move up and at times led the move down. to expect it to be treated like gold here as defensive in the middle of this would be not realistic. so disappointing for people holding these asset but when you consider the atmospheric run it is not surprising when you see free fall and amazon and we've talked about where even some of the mega cap toech stocks it is not surprising to see the move here. i think institutions are ready to pick some up. >> time for the final trade around the horn on this friday tim. back over to you >> i'm ready to follow carter and pick up some home depot on valuation and that 200-day bounce but 24 times forward, not expensive for i think the leading hard-line specialty retailer in the home department. >> steven grasso >> not looking foreto buying anything but if i had to, and i do want a

final trade, xlp, staples on a regularive basis outperforms. >> karen finerman? >> yes, if you look to hide somewhere, corner drug store, cvs 12 and a half times earnings, a nice dividend and it is okay in a market like this. >> b.k.? >> well, for me i'm going into the commodities area and some decent relative strength in the copper arena fcx, think that is the way play it that does it for us here on "fast" for the week. don't go anywhere. "options action" is upex nt.

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it is friday and that means it is time for "options action." i'm melissa lee. here is what is on tap. >> two roads ditverge in a sell-off and they split up and took both. first up carter worth tackles google and if it could continue. and then find out why tony is selecting microsoft as a long-term winner that could endure plus, professor ciao with a teaching moment on how to catch up when sudden and swift changes catch you on guard