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Stocks Drop But Crash Avoided

STOCKS DROP BUT CRASH AVOIDED

The headline: Fed Emergency Rate-Cut Averts Panic...Stocks Rebound From Steep Losses

A surprise rate cut coming from the Federal Reserve appeared to calm investors somewhat after dramatic drops overseas, explains Dylan Ratigan. Stocks battled back from a precipitous decline with the Dow suffering a drop of 465 points in the first few minutes of trading.

I think Tuesday was pretty close to the bottom, says Guy Adami.

Finally, Tuesday we saw capitulation says Jeff Macke. I think it’s a great time to take a shot on the long side.

I bought Altria at the open as well as Crocs says Karen Finerman. I was a buyer of stocks on the selling frenzy.

I still don’t like this market, adds Pete Najarian. I don’t think we’re even close to the bottom yet.

Were you buying amid the sell-off or did you stay on the sidelines. Tell us now. Answer the Charles Schwab Question of the Day.

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AFTER HOURS ACTION: APPLE

The headline:Apple Plunges More Than 10% On Forecast.

Computer and iPod maker Apple Inc on Tuesday forecast fiscal second-quarter earnings far below Wall Street expectations, sending its shares down about 10%, explains Dylan Ratigan.

Jeff Macke says the stock is selling off because traders are looking for any excuse to sell.

If you are in this name, I’d recommend adding to your position, counsels Pete Najarian. I think the stock is very attractively priced right now.

I also think it’s a buy, says Guy Adami.

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BANKS LEAD FED BOUNCE FROM BOTTOM

The headline: Banks, Brokers Finish In The Green After Fed's Emergency Rate Cut.

The financials rose despite poor results from Bank Of America (BAC) and Wachovia (WB) says Dylan Ratigan.

I recommend the Freddie Mac and Fannie Mae trade, says Pete Najarian.

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CONSUMER'S DEATH GREATLY EXAGGERATED

The headline: Retail Stocks Roar Back Tuesday After Fed's Emergency Rate Cut.

The Retail ETF jumped as Target (TGT), Home Depot (HD) and Lowe's (LOW) each finished up more than 5% says Karen Finerman. I sold into the rally and pared down my position in Wal-Mart, she adds.

I like Home Depot now, says Guy Adami.

We’re still in a bearish market, but I agree that Home Depot could be a long side trade adds Jeff Macke.

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WHALE WATCHING: WHAT'S BUFFET BUYING?

The headline: Should You Follow Warren Buffett And Ride This Turbulence Out On The Rails?

Buffett's Berkshire Hathaway raised its stake In Burlington Northern to 18.2%. explains Pete Najarian. You can probably trade alongside him.

I would buy BNI at $77 says Guy Adami. Also CSX Corp. (CSX) popped after earnings topped estimates on stronger pricing power, he adds. I like this stock, too.

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BAND-AID FOR YOUR BEAR WOUND?

The headline:Johnson & Johnson Reports Better-Than-Expected Profit, 17% Revenue Growth.

J&J’s international sales climbed 26% aided by the weak dollar, explains Guy Adami. I recommend owning it.

Also Roche (ROG) agreed to buy device maker Ventana Medical Systems (VMSI) for $3.1B, says Pete Najarian. Keep an eye on the diagnostic companies, he adds, as possible takeover targets.

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CROPPING UP IN A TOUGH TAPE

The headline: DuPont Holds Up After Reporting Strong Chemical, Seed Sales In Emerging Markets.

I like this stock as an ag play, says Pete Najarian.

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A BOUNCE WHERE IT ALL BEGAN

The headline: Homebuilders - Original Source Of Market Misery - Jump On Surprise Fed Rate Cut.

Toll Brothers (TOL),Hovnanian (HOV) and KB Home (KBH) all posted strong gains, explains Dylan Ratigan. And Ara Hovananian, CEO of Hovnanian Enterprises joins the panel for this conversation. Following is a synopsis of his main points.

Does the rate cut impact the demand for new homes?

“I don’t think the actual rate cut will have an impact,” says Hovnanian. “Most buyers use 30-year fixed rate mortgages which aren’t directly affected (by the cut). But it affects buyer psychology and that’s a huge thing right now.”

He adds, “Psychology has been very negative. Buyers are extremely cautious. Steps like this – as well as steps like the mortgage reset proposals could change that psychology.”

Dylan asks the traders, "Are you a buyer?"

This sector will likely take years to bottom, says Jeff Macke.

Centex (CTX) might be worth a look as well as Home Depot, adds Guy Adami.

I agree with Guy, says Karen Finerman.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! Prefer to keep it between us? You can still send questions and comments to fastmoney@cnbc.com.

Trader disclosure: On Jan 22, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (DIS), (YHOO), (INTC); Finerman Owns (GS), (M); Finerman's Firm And Finerman Own (HD); Finerman's Firm Owns (MO), (SKS), (WMT), (YHOO); Finerman's Firm Is Short (IYR), (IWM), (SPY), (IJR), (MDY); Finerman's Firm And Finerman Own (CROX); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owns (RIO) Puts; Najarian Owns (BIIB), (C), (CSCO), (MS), (MSFT); Najarian Owns (WM) Calls, (YHOO) Calls, (AAPL) Calls, (NSC) Calls

Symbol
Price
 
Change
%Change
CROX
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DD
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FNMA
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FMCC
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HOV
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JNJ
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MO
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AAPL
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MV RETAIL
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