'Fast Money' Recap: Surveying the Wreckage

Dylan Ratigan hosted CNBC's "Fast Money" Monday night. He started the show off with a discussion over the news that Wall Street investment bank Lehman Brothers(LEH Quote) had filed for Chapter 11 bankruptcy. Pete Najarian said that initially the market digested the bad news, but later in the day, when we didn't get more clarity from American International Group(AIG Quote) , the Financial Select Sector SPDR(XLF Quote) tipped over.

Jeff Macke explained that uncertainly is death on Wall Street, and that is making it impossible to own any financial stocks into the close. Guy Adami said, "For me, it's an extraordinarily sad day, but the market will recover from Lehman Brothers."

Joe Terranova explained that a market bottom will be set by the psychology of those who are trading it. He says we are entering the final stage: the stage of "capitulation."

Ratigan moved the discussion to Goldman Sachs Group(GS Quote) which is set to release earnings on Tuesday. Adami said the AIG news is a "game changer," but he says earnings have been taken down to a level where Goldman will beat expectations. Najarian said that "counterparty risk" is what dragged Goldman down today in front of its earnings.

He also pointed out that Goldman called for $149 oil, and now crude is trading under $95. Terranova said that tomorrow we will get a glimpse into how Goldman traded commodities themselves. Najarian mentioned that 100 puts on Goldman traded 4 times the open interest, and the 95 puts also traded above open interest. He said that that shows traders believe Goldman could trade much lower.