Dow's Worst 3-Day Start Since 1932

DOW’S WORST 3-DAY START SINCE 1932

The headline: S&P 500 Posts Worst Start to New Year Since 2000; Nasdaq Sheds 5.6% For First Three Days

The S&P’s drop is bad news, according to Jeff Macke. It’s now back to the “panic lows” of August and November and there is great concern it will break those lows and head further south. The trend is clearly negative and that’s not a hopeful sign, he said.

That said, being long the S&P for a trade with a tight stop could work until the index breaks 1400, Jeff said. Then all bets are off.

Guy Adami recommended buying consumer staples like Unilever , Procter & Gamble and Altria (MO) – even Microsoft (MSFT) – into a slowdown.

Hopefully the Fed got the picture after this week, Jon Najarian said. The market needs help.

OIL JOINS THE CENTURY CLUB

The headline: Oil Slips 1.3% After Hitting Record Intraday High of $100.09 Thursday; Crude Finishes Week with a Gain of 2%

The conventional wisdom says a slowing economy would depress oil prices but Guy Adami would buy a name like Jacobs Engineering (JEC) that is profiting off high energy prices. The stock was $39 last January and now it’s over $100.

Jon and Pete Najarian would both short refiners like Valero even with oil at par because raw materials are so high.

THEY’VE GOT THE POWER

The headline: Utilities Hold Strong in a Tough Tape This Week as Treasury Yields Decline

Public Service Enterprise Group – a Guy Adami favorite – remains a good safe harbor play, he said. But there’s likely not much room for upside as it’s already up 53% in a year.

NOBODY’S LEAVING HOME

The headline: Airlines, Auto Rental Companies, Casino Stocks Drop This Week on Recession Fears

Jeff Macke, nearly famous for repeatedly saying that anytime the market is open, it's a good time to sell the airlines, is changing his tune – kind of. He sees a trading bottom in United and recommended buying it for a trade and a trade only. Rental car companies, which are trading like they’re already in a recession, should be avoided at all costs, he said.

FINANCIAL FLAMEOUT

The headline: Financials Continue to Sell Off on Credit Crunch, Economic Growth Concerns

The investment banks finally cracked, Pete Najarian said. Goldman Sachs is under $200. Bear Stearns is facing a government investigation. Now is the time to buy puts on the brokers and the XLF , he said. A close below $28 on the XLF is “problematic.”

It’s too late to short the financials, Jeff Macke said. But it could be years too early to buy them.

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Trader disclosure: On Jan 4, 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 (INTC), (YHOO); Pete Najarian Owns (CSCO), (MSFT); Pete Najarian Owns (AAPL) Options, (NEM) Options, (VLO) Options, (WEN) Options, (YHOO) Options; Jon Najarian Owns (ACI), (AG), (AGU), (BTU), (DE), (DELL), (MON), (MOO), (MOS), (POT), (WEN), (YHOO), (WLP); Jon Najarian Is Short (BSC), (KLAC), (VLO); Charles Schwab Is A Sponsor Of "Fast Money"