'Fast Money' Recap: Fear in the Markets

The trading panel noted the extreme volatility of today's market action.

Author:: TSC Staff
Publish date:: Nov 20, 2008 7:15 PM EST

Melissa Lee hosted

CNBC

's "Fast Money" show Thursday night. She kicked the show off, saying how the stock market breached key technical levels in today's session.

She said the

S&P 500

closed at levels not seen since April of 1997. Guy Adami said the most surprising thing was how the

Dow Jones Industrial Average

bounced the first time off 7,800, before closing on the lows. "We could see a wild day Friday where the Dow trades to 6,900 and then closes with an 8-handle," he said.

Pete Najarian pointed out that when the market was rallying, it was a broad move up. "The volatility index is telling us that the market is still ready to move 40 to 50 point increments on the S&P 500 per day," he said.

Lee switched the discussion to the financials. She said Saudi Prince Alaweed announced he plans to buy another 5% of

Citigroup

, but the news didn't move the stock up.

Jeff Macke said, "The government needs to remain more quiet and let this thing play itself out." Zachary Karabell said that we will look back at this period and remember it as the "recapitalization of the U.S. financial system, based on money outside of the U.S."

Lee pointed out that Citigroup is back at levels where Alaweed first bought his stake in January of 1990. Najarian noted that Citigroup saw some huge put buying today. Also, he said someone came out and bought over 28,000 of the Dec. $4 calls on the

ProShares Ultra Financials

(UYG) - Get Report

Lee mentioned that

Goldman Sachs Group

(GS) - Get Report

broke through its IPO-level from 1999.

The "Chart of the Day" looked at corporate bond spreads, which hit a record high. Lee said this is evidence that there is fear in the market that perhaps corporate bonds are at risk of default.

Macke said people are trading terrified and that creates its own reality. He said there's not "a lot of confidence after this TARP debacle." Karabell noted that the risk of default for a lot of companies isn't really there, despite the fact the fear is there.

On a more optimistic note, Adami told viewers to look at

Gap

(GPS) - Get Report

which reported some strong numbers after hours. "The bottom line, Gap is running their business better and at some point it will be a positive for them," he said.

Lee changed the conversation to the price of crude oil, which closed below $50 a barrel. She said the action in crude oil could mean we are in a deep retracted recession. Najarian told viewers to look what happened to

Freeport McMoRan

(FCX) - Get Report

. He said the

Oil Service HOLDRs

(OIH) - Get Report

was "decimated" today, plus

Chevron

(CVX) - Get Report

and

Exxon Mobil

(XOM) - Get Report

were" absolutely clobbered."

He says "Both Chevron and Exxon could have more potential to the downside." Once both those stocks trade at price-to-earnings level of 4, then he says they could bounce up.

Jeffrey Harte, managing director of Sandler O'Neil, joined the traders to discuss Citigroup. He said he can't remember the 10-year Treasury being under 100 basis points before and Citigroup is bearing the brunt of it.

Harte mentioned he doesn't think Citigroup will go bankrupt, but the common stock could go away. He told viewers that if they are a Citigroup bond holder they will be fine. He said commercial real estate and commercial credit are the next areas to collapse in the market. Harte said

JPMorgan Chase

(JPM) - Get Report

is a stock people should think about buying in the low $20s.

Chart Terror

The traders spoke with Louise Yamada, managing director at Louise Yamada Technical Research Advisors about the direction of the market.

She said the 2002 lows are very vulnerable and chances are they will be broken. "We could see a drop in the S&P 500 to levels of 600 to 400," she said. Yamada mentioned that 13 Dow Industrial stocks have already traded below their 2002 lows. "We have some serious declines ahead of us," she said.

Hot Hand

The crew talked with Peter Schiff, president of Euro Pacific Capital about his market outlook. Schiff has made a name for himself by being one of the only people to call the collapse in the stock market back in 2006.

Schiff said capitulation, if we get it, is years away. "Our markets are going lower and our entire phony economy is collapsing around us," he said. Schiff said the government should get out of the way and let it happen because there is nothing they can do to stop it.

He told viewers they should buy the dips in commodities, buy stocks aboard and get out of the dollar.

He said, "The next major crisis is going to be a major run on the dollar, which will have tremendous repercussions for our economy and our markets."

He said that we can't expect the world to do all the savings, make all the sacrifices and do all the production. He said viewers should sell or short the dollar. He also predicted that gold will hit $2000 an ounce next year and then go higher.

Battle Bear

The traders discussed some ways to battle the bear market. Adami said gold has been a non-performer and it's heading for a 6-handle. He told viewers that if they want to play

Target

(TGT) - Get Report

, they should use the low it made yesterday as their stop.

Najarian said you have to love the unbelievable numbers out of

Charles Schwab

(SCHW) - Get Report

and

TD Ameritrade

(ATMD)

. He says "options action is suggesting these stocks could move up."