tv Fast Money CNBC January 28, 2016 5:00pm-6:01pm EST
stretch the end of january. >> we've got to get rid of this month. >> mike, stephanie, thank you both so much. what's on tap? >> of course, we're going to be tracking all the conference calls. one top technician said three-day rally in oil, not so sure. we'll show you the chart. >> okay, over to you. "fast money" starts right now. i'm melissa. i have the traders on the desk here. the tale of two techs. amazon was a huge miss. the stock is tanking. microsoft is out on the top of the beat. shares are rallying. we'll bring you all the headlines on both conference calls as they break. there's something wrong about the charts, and he'll tell us what that is. b biotech stocks lower. first, we start off with tech going wild in the
after-market session. the stock joining apple in the camp of tech losers this earnings season. meanwhile, microsoft surging, joining facebook among the tech winners. so who was telling the real story in technology? where do you put your money as an investor? steve? >> i don't think anybody's telling you the real story about technology. i think all the companies you just mentioned, in my opinion, are specific to those four companies. let's talk about amazon. i thought amazon would rally in the earnings and rally past earnings. i got half of it right. that's not good enough. you've basically given up today's entire gains and then some. this was a 2014 amazon release. what does that mean? go back to 2014, and you'll see what i'm saying. digs appointing releases, margins not up to snuff. that's exactly what you've got now. where do you buy the stock? well, bottomed out at 300, basically traded up to $700 late last year. $500, i know it sounds ridiculous, but that's 50% correction of the range that i
just talked about. given this quarter, i think you could actually trade there. >> karen? >> well, amazon, you know, there's probably nothing wrong with amazon except valuation. that's been wrong for so many points. so this kind of move, yes, it's disappointing, but i don't know. i agree with keith, this is a very specific story. facebook is a different story obviously than amazon. it just becomes a valuation. it's unsustainable to me. i don't know -- this clearly isn't good enough to get it going. the bar is high already. i still think it's still in crazy land. it's still a crazy valuation right here. great company, great product. >> i understand these are vi individual stories, but directionally as we enter the depths of earnings season, we're still going to get google and some other big cap tech names, what's your feeling here? >> it doesn't look good. the only thing that seems to be working is the services and facebook.
that's it. anything else seems to be pretty bad. i mean, apple, listen, apple had a great quarter in terms of record quarter. but they're saying the future is not going to be so great. amazon, their revenues were not horrible, but it cost them a lot of money to get those revenues. in this environment, it's going to be tough. tech in general, samsung we had last night, they had terrible numbers saying that cell phones have slowed down. in general, the picture we're getting from earnings season is a slowdown, and then looking forward doesn't look so great either. >> are there bellwethers in technology we should look for in order to sort of set the table? out of the earnings reports we've had, and what we will have, what are you looking to as a directional sort of indicator? >> i think facebook, for me, i've been in and out of facebook. i'm not in it currently unfortunately. but i think that's the name that's probably going to lead that type of tech company which is basically everywhere. it has its hands in everything. and is everywhere. so i think it's a little bit
confusing to the individual investor. but i think getting back to what keith said, amazon -- this is the old amazon report. but they never made any money, right? they made a little bit of money this time. they just made less than what people expected them to make. maybe it's not the old, old amazon, but somewhere in the middle, the hybrid of the old and new amazon. i think what people are going to do is price it that same way. where they're going to let it come in, probably to around $500, and see how much juice is out of it. but i think going forward, aws is still growing. >> this is sort of a measure, a test of market sentiment here in terms of how far the swings are. facebook had a great quarter. then you see the swing in amazon. tremendously to the down side. this is the sentiment of the market these days. >> people scratching their head. one of the points i made last night, it was a huge swing to the upside in facebook. it shouldn't have been down to
95 in the first place. >> for amazon, it should never have been up to -- >> well, facebook -- >> quickly, the last three quarters of amazon, in my opinion, have been spectacular. margins were improving. big revenue beats. this is what we saw, again, back in 2014. >> and they can do that anytime they want. >> i don't know if that's so true, right? because they spent an awful lot of money to get people onboard. they spent money getting people on prime. they've got 50% of the u.s. now on prime. at some point you run out of that, and international -- >> we're talking about them delivering their own products. that's a story -- >> it costs them a lot of money to do it. i'm not very excited about amazon buying planes and frying them around. >> they're fighting internally in the stock, trying to figure out how to pull back enough, how to give them just enough of a taste of earnings before they don't get spoiled.
so it doesn't ruin their business model. >> i don't think they care where their stock trades. i really don't. you disagree, apparently what that big sigh is about. >> how can you not care? they want to devour the competition. do you think he doesn't care if the stock is -- these guys are driven by ego. the high stock price. >> let me ask you this. are you an investor in amazon? >> i've been in an investor in amazon. not now. >> if you thought it was driven by ego, that is the wrong -- >> i love big egos. i love a guy that thinks he can conquer the world. >> does he care about conquering the way commerce is done around the world or does he care if his stock trades at $5.70 or $6.30 -- >> $6.30 allows him of having a better business plan of conquering the world. >> i disagree. >> it's sort of win the battle
lose the war type of thing. if you're looking for, i think probably 8% of revenues now, i'm sure somebody will kill me because i'm off by a half a percent or so, but, you know, i think we're in a different ball game now. amazon web services which is a huge store, you agree, now people say it's only 8% of revenue, margins are decreasing, stock's got above ahead of its skis. this quarter should get it back down to 500 bucks. >> earnings slashes year end to 2000 from 2,200. we should note a third of the s&p 500 has reported. and both earnings and revenue growth are negative. jpmorgan's head of the equity strategies. so great to have you with us. >> thank you. >> have we seen anything out of earnings season that has surprised you? i mean, is what we've seen so far one of the reasons why you
lowered your forecast? or an expectation of future earnings? >> no. there's more of a forward meeting to review that caused us to lower our expectations. as far as this quarter is concerned, i would say nothing out of the blue. expectations are very low. we were calling for anywhere from 2% to 3% earnings. we're getting that. i would say 65%, 70% of the company is beating on earnings. keep in mind, buyback activity will start picking up little by little. so all of these elements i think in the sort of near term, short-term might support equities, but my bigger concern is more medium term, in the next three to six months, what is to come. >> a lot of investors these days are wondering whether or not a recession is in the cards. which is an interesting discussion. it's amazing how things have changed over the course of a year or so. is that somewhere within your forecast? is that a possibility? >> look, certainly it's a possibility. but i wouldn't necessarily say
recession at this point. i would say perhaps maybe more so concern of a bear market. we tend to think about the market as peak to trough. currently s&p had roughly 1900, maybe seeing 1700 at some point. absent central bank positive catalyst, if you will. i will say, you know, recession risk at this point still relatively low. we need to see how underlying economic data continues to develop, manufacturing side is obviously very weak. if you simply look at some of the isms, manufacturing, they're printing around 48. we'll see what the new month brings. there's concern it will drop down to 47, that is ression territory. we're seeing a deceleration in the trend. i think it's still a little too early to say. broadly speaking, risk/reward, to the down side. >> is central bank shock or some other shock would get you back on this program saying, you know what, 2000 was too low and i
think we're going higher now? >> look, basically you've had central bank diverging pressures. a fed that's basically trying to tighten, the rest of the world that's trying to ease. and china, and em, tries to run an independent policy, but still linked more to the u.s. you see pressures in the dollar upwards, pressures in commodity prices lower. and that impacts the u.s. earnings. so that's why i would say from that point of view, you know, earnings recession risk is rising. and so that's something that we sort of need to pay close attention to. if the fed decides to sort of take a more dovish view, i think it will provide a relief. i wouldn't necessarily say we go much above 2,000. i think you need a bigger catalyst for that. perhaps china has a moderate stimulus, maybe a fair election outcome, which i know is too early to talk about. but that's around the corner as
well. >> thank you for joining us. 2,000, we make a big deal of a strategist lowers his or her target. this is bullish here. >> another 100 points in the s&p. so, yeah, listen, i think given the risk he just outlined, he's saying a lot of things that pk is saying in the last six months. i think that's exactly what brian's been trying to say all along. asymmetrical risk. that's one word i just heard there. asymmetrical risk make -- >> one word. >> asymmetrical risk. markets extend to the up side. they also make him extend to the down side. >> do you agree, that there's a swoosh down? >> oh, sure. >> at the end of the day we could see a gain for the year. >> no, i don't think we see -- no, no, no. i'm in the multi-year bear market camp. i think everything will come to
pass. we get a fed that walks back their tightening. we've got china that perhaps does some fiscal policy. and some monetary easing. but i think the path from here to there is a one to three-year path. and it's pretty rough. so no. >> that's what's so difficult as an investor. the one to three-year path is so hard to invest in that. you have to have your short-term, long-term horizon. at the end of this week it's going to screw people up. because you have the pension rebalance. you have the money coming into the equities. you can get the false flop in the marketplace. we'll see how the market reacts next week, first of the next week. we'll hear from one of the biggest bulls on the name. microsoft surging after hours. we are on the conference calls, both of them. we'll have analysts' reactions on both. think the oil rally is back in play? think again. the man who called the january swoon said there is something disturbing about the, charge.
the top-selling f series declined in the stock. of course, the term peak, the news to describe a number of different industries of late. airline traffic for one. that remains strong. oil is low. but airline stocks have fallen. some of you suggest there is a peak in iphone sales. is there a peak in peaking? peaks? >> peak peak. well, there's a lot of peaks out there at this point in time. let's just take a couple of these, each one at a time. so iphone sales, cell phone sales, we saw it from both. apple and samsung, two biggest in the world, things are slowing down. companies in china that are selling cell phones are actually going outside of china to sell them. we know that's slowing down. airlines, traffic may be slowing down. but look where the growth has come. it's come from the emerging markets, from boeing and companies like that. that as we know the emerging markets will have a tough year. that will likely slow. the last one which i think a lot of people are not paying attention to is the auto peak. we saw ford today.
they're selling trucks like they're going out of style. the other part of the business isn't so great. i listened today to mike jackson on the auto nation call and he said the next six months to a year are going to be pretty tough. the auto companies have potentially too much inventory coming out, and his thoughts are, maybe not a peak in auto sales, but a plateau at these levels. >> what's the extrapolation of peak peak? >> peak peak means things are turning over. the reason -- >> in the economy. >> the reason why i say auto sales is that's one of the bright spots out there. that is a big part of the economy. when that peaks, plateaus, or turns over, that's an issue. >> does the peak concern you? >> yeah, peak peak concerns me. i wonder on the heels of that, hotels, anything travel related, or those -- h.i.t., it looks like it has peaked. but i cannot -- it would be too impossible for me to say, you know what, i'm out of the cycle. i'm not going to be long until the cycle's turned. i can't -- >> coming down the pike, so to
speak, you're going to have autonomous drive cars, i know that's going to take a while, but there's going to be a lot of options that are available in the next series of cars. i think ford, it was the ford f-150. i think it will be technology. i think people are holding back. almost like the iphone. they're holding back now. and we're ready to peak. but i think we're going to blast through. i don't necessarily think it's over. >> you don't think there's a peak in the peak. >> no. just what a stock does, you hit your head up against the resistance and blast through. >> but we've had tremendous pent-up demand. because of the 2008 crisis, people did not buy new cars. we had tremendous demand. now you're up at record levels in auto sales. 17.5 million let's call it. >> cash for clunkers back when you had that -- >> no, no -- >> all those old cars are off the road. >> i know, but the problem is, everybody bought a new car.
>> what gets us to the 18 million? >> is there no level at which you would buy a stock? the question is, if you look at the gm multiple, is it a trough multiple? >> i don't know. >> i don't know, but at some point, i would think there's enough value there that you could say, all right, we may not be -- >> but i would rather to wait to see -- i mean, from what mike jackson was saying on the call today, both gm and ford are producing an awful lot of cars. maybe overproducing for what's going on out there. so i think until you get through that cycle, it probably overshoots on the down side. >> goldman sachs sounding the alarm on the effects on the zika virus. noting warnings for zika encompassing several important cruise destinations, such as the dominican republic, haiti, puerto rico, st. martin. mostly for pregnant women. we should note that we reached out to royal caribbean and they
informed us that they have not modified any of their existing itineraries at this time. grasso? >> i think until you start to see them modifying their itineraries and start to see some real effect, you still have to take a chunk out of the airlines today, too. not just the cruise lines. goldman sachs put out a piece about what we're talking about right now. they equated it to ebola and mers. to a bunch of other diseases that have been out there in the past. they've always been buying opportunities. is this going to be a buying opportunity? it remains to be seen. but if the media runs with this, you have more and more pictures -- >> blame the media. >> it is. people start to get exposed to it visually. they start to get scared and they don't travel. it remains to be seen. >> when i heard royal caribbean was not modifies any itineraries, it means there's not been a pullback so far for them to actually change. >> you look at carnival cruise, royal -- these stocks have been
on fire since i would say mid-2012. and to steve's point, every piece of theoretical bad news has been looked past by at least traders and investors. maybe not so fast this time, because now you have a broader market that maybe is turning over. maybe you have deflationary pressures. maybe the consumer will ratchet back. list listen, ccl isn't expensive until people stop getting on cruise ships. my sense is there's still room to the down side. stock was down 2.5% today. ccl could train down to 41 1/2, 42. >> as we head to break. let's look at amazon. it is down by 11% so far in the after-hours session. an amazon bull has a $700 price target on the stock. he'll weigh in to tell us what he got wrong on the name. i'm melissa lee. you're watching "fast money." here's what else is coming
up. >> so you're telling me there's a chance. >> that's what investors are saying about crude. but there's something in the charts that might make you think twice. plus, something funky is happening with biotech. and it could spell more trouble for the nasdaq. we'll explain, when "fast money" returns. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?
welcome back to "fast money." meg? >> hey, melissa. in the fourth quarter, good to see what buy yo tech needs. coming in with a big bead on bts, and raising their guidance after reaffirming it a couple of weeks ago. the call is ongoing. folks will listen for how the launch of their new cholesterol drug is going. it's been fairly slow. people are waiting for more data on whether they actually prevent heart attacks, deaths, things like that, for that to really start to ramp up. people will be listening closely to what they say in business development. a lot of companies are saying that the depressed valuations in biotech could lead to interesting opportunities, is what we heard from viogen yesterday. but the smaller companies have
to get used to their new valuations. the next big earnings to look for is gilliad. that will come on tuesday. down more than 13% year-to-date. they are in the eye of the storm when it comes to the drug's pricing controversy. just this week, the massachusetts attorney general sending them a letter saying their hepatitis c are prices may be breaking massachusetts law. in her letter to gilead, she urges them to enable disease eradication. we had the massachusetts attorney general on, and we asked her how the pricing strategy breaks the law. she didn't really give us a clear answer on that. it's a tough time for gilead right now. >> the letter accusing them of potentially breaking the law through pricing, comes over a year, since the drug was on the
market. we're already talking about top comparisons. because we've gone through whole cycles with the hep-c drug on the market. >> it's been on the market since december of 2013. they talk about fairness, so we're curious to know how it breaks the law. >> meg, thank you. broader biotech getting hit hard today, hitting lows not seen since 2014. she's talking about amgen. and good numbers from biogen as well. >> it's hardly moving. >> although, you know, when you have sentiment like this, and for three or information years, a giant swing, the pendulum doesn't stop when it goes back to fair value, it keeps going. i think we have a ways to go before you see the bottom. >> huge eps beat. decent revenue beat. most of their drugs much better than expected. guidance for next year i thought was really good.
if biotech was in favor, which it's clearly not, this stock would be up 4.5%, 5%. it hasn't even gotten back the losses from today. to karen's point, the pendulum swings, it swings now the wrong way. you need ibb, in my opinion, to get back up above 285 before you can start to look at this, unfortunate unfortunately. >> now it seems like, i don't want to say politicians, but politicians, lawmakers, whoever, they're glomming on at this point in terms of the drug price battle. >> that's the problem. even with the good ones, the earnings are in question. not because the company's not going to hit it, but you just don't know politically are they going to be able to charge what they used to charge. there's a huge question mark. it looks like it's coming from all sides. it's a bipartisan attack on these. so for me, xpi, ibb, all sells until after the election. and maybe even then you need more. >> if you don't know what to charge on a drug, you don't know what the company is worth in an
m&a transaction. big name earnings hitting the tape tonight. live team coverage following the breaking headlines and the moves on amazon, which is falling hard. microsoft is following. electronics art, also following. in new york state, we believe tomorrow starts today. all across the state the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in the hudson valley, with world class biotech. and on long island, where great universities are creating next generation technologies. let us help grow your company's tomorrow, today at business.ny.gov ♪ ♪ those who define sophistication stand out.
(train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing". welcome back to "fast money." a rally up triple digits. with only one day of trading left in january, all three major indices are on track for a down month. on track for their worst months since may of 2010. here's what's coming up in the second half of "fast money." oil jumping today. can the rally last this time? a top technician will tell us what the charts have to say. why traders are seeing what's here to say. we've got the details ahead. we start off with some of the big earnings out tonight. a tale of two tech stocks in the after-hours session. check out shares of microsoft moving higher, while amazon shares are now sinking, down
13%. john ford is covering amazon back at headquarters. josh, let's kick it off with you. microsoft's call just about under way right now. >> melissa, the big number here is $25 billion. the deferred revenue microsoft reported that key measure of future business. the street was at $23 billion. fbr saying it was momentum building for microsoft in 2016. rather than slowing, that is different from what we're hearing from other enterprise tech companies. what is driving that good news? well, microsoft is still executing on its cloud services, meaning office 365, and azure, which is its answer to amazon's cloud business. on the call we're going to listen to more color about the cloud business. its broad outlook, and as whether the ceo has anything to say about the macro environment. apple's tim cook has expressed real concern there.
>> on the amazon call, lots of talks about fulfillment, lots of talk about lo jess ticks. most of the questions and in management's commentary. amazon adding more of its own delivery to its fleet. take a listen to what the cfo had to say about the reasoning behind that. >> in order to properly serve our customers at peak, we've had to add our own logistics to supplement our existing partners. it's not meant to replace them. those carriers aren't able to handle all of our capacity we needed at peak. >> as you know, miss on the top and bottom lines for amazon, analysts have been trying to figure out a bd story to tell here. but amazon management not giving them much. not saying anything negative about the macro environment, talking about good news in prime, in fulfillment by amazon, explaining that the sequential change in the results was not as good as it's been in the past simply because prime day was better, made the previous
quarter better than it typically is. so that's the sense i get. there are lots of questions about, do they have anything negative to say about macro. they talk about how well they're doing in india. so given perhaps that they're within the range of guidance that they gave, they don't feel a need to be too negative. but the stock is down quite a bit after hours. as you know, though, guys, they don't always seem to care that much about the direction of the stock price. melissa? >> john, thank you. let's turn back to microsoft earnings here. the managing director at fbr capital, working the red phone for us on the microsoft conference call. what were the highlights of the quarter in your view? and if you had to poke holes, what would that be? >> it's really about cloud at this point. that's the rock of gibraltar, compare those to the other tech dinosaurs, oracle, hp that they're competing against. it shows windows 10, 10 million
uploaded to date. the strength on the cloud of the billings performance. this is one where you will continue to see the momentum there, even though there are massive pc head winds, they picked a right time to bet on cloud. and the great free cash flow numbers and margins. this stock will continue to go toward aarp's territory. this quarter, you feel a lot better about it in a real choppy tech environment. >> aarp, senior citizens, age, 65 or something. >> i think this will have a 6 in front of it. especially in a tough -- we'll see what they're saying on cloud. that's the focus of the street. >> one more question, if i can, to you, dan. how concerned are you about the price cuts that they launched the beginning of january? it seems like amazon has launched its price cuts. microsoft cut up to 17% in price. the last time there was a pricing war was back in 2014. and we saw declines in revenues for these players in the ernsuig
quart quarter? >> that's a good point. it's a $200 billion cloud opportunity. amazon's at the top of that. microsoft is number two here. it shows in the quarter the strategy's working. that's what investors are betting on. you feel a lot better hanging your hat on this cloud number. >> we'll let you get back on that red phone there, dan. what's our trade here? will it go to 65? >> you know when you can join aarp when you're 50 years old. >> it's 50? >> believe it or not. >> let's stop for a second. why did you immediately look over at me, wise guy? >> i don't know. it was an instinct. i didn't mean anything pi it. >> but the point, the reason why i say that is because 50 is a key level here on microsoft. that's the breakout level. that's where we came back to, bounced off. now things are looking good. i would not chase it in this market. >> i would sell it. >> as you back off, with the dividend, and the growth, as
long as it's above 50, you're okay. >> running right into resistance here. it's running right into the 50 days, basically $54. it's been declining, a series of higher -- i'm sorry, lower highs. it all but filled the gap when it traded up in october, it gapped higher. and recently it had a sell-off in january, down to the $49 level. it all but closed that gap from october. so it's been weak going into this earnings cycle. i think that if the stock cannot get above $54, i know it's very close. i think you'll be selling this stock. >> we see all-time highs. >> i think it was 1999, i think it was about -- somewhere north of 60 bucks in '99. we're moving towards those levels. this stock was north of $55 right after they reported. this was a great quarter. i think obvious ri dan said the same thing, margins improving, they turned the ship around. my concern is, if it doesn't hold the gains we see in the aftermarket and falters into
tomorrow, maybe the momentum in the upside will wane and we'll see -- >> $63.60. >> that's all it was? okay. close enough. >> in this sort of market, that was microsoft, i don't want to say get a pass, but their valuation is clearly much lower. 18 times or low. >> that's not low for microsoft. >> that's not low for microsoft, that's true. >> i feel i missed the bulk of the move here. because at 65, there was enough bulk left. but the balance sheet obviously is fantastic, as it's been for years and years and years. but the pe multiple for them is on the higher side. still ahead, the force not helping electronic arts this quarter. we'll get the details from the call next. oil jumping nearly 5% today. and taking energy stocks along with it. but you should not trust this rally. he'll explain what has some worried, after the break.
>> rumors, up as high as $34.80. we faded. but basically, here's our picture of crude over the last two, three years. and you almost can't even see this. but we've moved from 27 to 33, 34. 25% move off the low. all for what? meaning we're very much still in this down trend. if there's going to be a bottom, bottoms look a certain way. they don't look like this. there will be present i of time to figure this out. ongoing downtrend. look at the long-term picture of crude. all the way back to the early '80s, even '73, '74 in the oil spike, crude basically is never, ever violated $10. it's never gotten above $40. it stayed in this range for a long, long time. in the crash in '09 we got back into it. we had this now, we're back into it. there's every possibility we're just stuck here. but the notion we'll have a big rebound again, there's nothing to suggest that. energy stocks, the same thing.
the xle, mirrors the s&p 500 energy complex. here's our downtrend. you could say, hey, i want to play for a move back to the trend line. all right. that's all just that, playing. i think we would rather wait for it. if and when it occurs, try to short it back against the line. i don't want to gamble it will happen. i want to do something if it does happen. so this is then the decision that has to be made. i think by equity investors. this is the s&p 500 versus the s&p 500 energy sector. i must say when my eye sees that, it makes me want to buy the orange line, and play for a meaner version, that energy is cheap, it's overdone, oversold. it's got to sort of throw back. what if i start my narrative, my story line somewhere else. what if i start it going back to when the data begins in the late '80s. all that we've done now is return to literally in line with the s&p. and so from here forward, and that's the bet, right? forget about what we know about
fracking, about sanctions, about who's coming on and offline, about whether they're cheap or not, whether they're going to cut or not opec, would you rather bet on the orange line which is essentially about four or five stocks, versus the blue line, the s&p, which is nothing less than the mighty nike corporations, starbucks and amazon and netflix and so forth? meaning what is the value to buy energy for a bounce? we don't see it. we would continue to be bearish of energy and energy stocks and fade rallies. >> carter, i hope this comes out the right way. you say it doesn't look like a bottom to you in crude. what would look like -- i'm saying this sincerely, what would look like a bottom? what do you need to see in terms of price action? >> let's do this. here's a nice blank screen. they're not going to let me draw on that. we'll try another one. here we go. if a down trend is that, bottoms look like that.
they take time. they're a process. crude oil, that doesn't look like that. it's time, it's healing. plenty of time to figure out whether crude is trading higher. it's not going to go any lower. >> amazing work at the board. >> master at the board. >> he's on the mt. rush more of people from the board. >> he hit the technicals. when you look at the bottom that you saw around $26.55, and heard about non-opec members cutting production, that to me is such a hopeful event. it's not going to happen. iraq keeps pumping, saudis keep pumping. we've gotten so much more efficient of pumping here, i don't think you could ever trade above $50, ever, in crude, ever. >> i want to get back to the would you rather that carter eloquently -- >> you tipped it a little bit. >> would you rather, the question was, bet on the energy
equities or s&p 500 filled with more diverse basket of stocks. i think maybe it's neither. >> it's neither. it's absolutely neither. let's look at what energy is telling us. energy and oil is telling us there is overcapacity in the global economy. that's not good for s&p 500 stocks. so i want to bet on neither of them. i think oil -- i'm with carter, if you look back act the '80s, we're probably in that range. we know that saudi arabia is going to pump, even when they cut in the 1980s. even when saudi arabia cut production, oil prices went down. so neither. >> would you rather -- >> love this game. >> actually, i don't want to play with you. >> that was cold. i'll play with myself. >> well, you know, the value -- >> how do you know when it's time to get in? >> you don't. you only know after. but i always think the bottoms are made when the story is not very compelling, right? so the story is --
>> it hasn't been compelling for a long, long time. >> it's always darkest right after it was just the darkest before then. i think energy's so volatile, we could see spikes, but i think the energy equities could move eventually, not this week it seems to me, but diverge from the s&p. i mean, from oil. from oil. >> from crude. i think that's what people are scared about. they're scared about missing the biggest jump in the equities. >> i think -- listen. i've been horrible at a lot of things, but we've done a decent job in things like schlumberger. guess what, folks, it traded down there. we flagged it. it's up 6% today? people are going to chase. they're going to chase it into that down trend line that cbw just talked about. i think that chase takes it to 72. i think you pull the rip cord
there. how about that. >> i feel bad about taking would you rather away from you. >> you don't feel bad. i know when you feel bad. you don't feel bad. forget it. you had your opportunity to play would you rather with me. >> fine. i'm moving on. coming up -- you haven't seen anything yet. we'll tell you why traders are betting on a wild ride ahead. check out microsoft, amazon, and electronic arts, and western digital. they're all moving um.
welcome back to "fast money." julia boorstin is in los angeles with the story. julia? >> that's right, melissa. disappointing digital revenue weighing on the stocks. on the earnings call just now, there's been a lot of talk about "star wars" battlefront, surpassing the gains expected to sell by the end of march, by the end of december. andrew wilson talked about his appeal to the younger demographics than usual. and potential for that game with the digital content it recently launched, as well as other games
ahead. they're confident they'll be able to return to the higher growth margins than they've had in the past. >> it was a bright quarter for our partnership with disney and lucas films. our team delivered a game with amazing visual fidelity, authenticity and true scar parse action fantasy that's fun for fans of all ages. it became the largest launch in the first "star wars" game and exceeded our guidance for the full year. >> he talked about the potential in the newly formed east port competitive video games division, saying ea is working on a best in class program for competitions of gamers at all levels. ae is clearly working to put a positive results on the investors. the ea shares down about 8% in after-hours trading. >> julia, thank you. karen, what's your trade? >> "star wars" gigantic beyond anyone's original expectations. every one of the stocks you would have thought, disney,
imax, these guys, all peaked just before the movie came out. so we see that all the time. reinforcing that, you know, buy the rumor, sell the news. >> now have we seen peak "star wars"? >> god, i hope no. i'm so excited for the next installation of the movie. i think in terms of what electronic arts, i don't think it's ridiculously expensive. it's a unique property. i think the guidance is what scared people. digital revenue was a miss. this was one of the better performing stocks in 2015. i think it trades at another 5% from here. i think you buy the stock again. >> volatility has remained relatively high this year. stocks struggled to gain footing. traders are betting the trend could continue for the next few months. mike? >> so after about five years of very low volatility, this was six months ago, as you've noted. recently we've seen a pretty big uptick in volatility. the question is, are traders in
the vix betting we'll drop back down to those levels or expect to see the same? the latter is unfortunately the answer. we saw a really big sale of the spread, and 25-27 call spread. basically they're betting this is the range we're going to occupy. they collected $1.26 to do this trade, which is actually called an iron condor. the bet is it is going to be remaining probably between 26, we'll call it, and 19. which is well above the five-year average. >> how do you put this to work in your world? >> i think the way i always look at volatility for what i'm doing is in s&p options. i want to buy puts. that's my cheap kind of protection for any long portfolio that i would have. in this particular case, i'm more in the camp that volatility continues to raise higher. even the fed itself has done studies saying every 25 basis points they raise, increases volatilities over the next year
or two. >> tomorrow, of course, is the full show. >> love that show. 5:30. >> 5:30 eastern time. coming up on "mad money" tonight, looking for a read on the internet of things. talking to the ceo of abnet in tech. and his plans to recharge the stock's performance. can american electric power keep the lights on? we'll talk to the ceo after earnings. all that, and much more, next on "mad money." i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim.
td ameritrade. man, i'm glaaflac!c pays cash. isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses? aflac! learn about one day pay at aflac.com/boat blurlbrlblrlbr!!! e*trade is all about seizing opportunity. so i'm going to take this opportunity to go off script. so if i wanna go to jersey and check out shotsy tuccerelli's portfolio, what's it to you? or i'm a scottish mason whose assets are made of stone like me heart. papa! you're no son of mine! or perhaps it's time to seize the day. don't just see opportunity, seize it!
(applause) there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits.
fidelity -- where smarter investors will always be. finally fast but not least, barbie may look a bit more like the rest of us. mattel announcing that barbie will come in three new body types, curvy, tall and petite. they'll hit stores later this year. in case you want to buy one. >> no. time for the final trade. grasso? >> bank of america started to bounce. let's see how long it can go. >> in crude oil, overcapacity. and the auto sector. gm. >> karen? >> in the tech space for me,
google. >> i thought the visa quarter was good enough. the stock sold enough. i think you can buy it right here. >> i'm melissa lee. thanks for watching. "mad money" with jim cramer starts right now. monday. in the meantime "mad money" with jim cramer starts right now. my miss is simple -- to make you money. i'm here to level the playing field for all investors, there's always a bull market somewhere. 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 may friends, i want to make you money. my job is in the hospital to enterta entertain, b ♪ everybody gives up to easily. they get disgusted,