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WASHOUT: Stocks Plunge as Slaughter Continues

STOCKS PLUNGE AS SLAUGHTER CONTINUES

The headline: Bear Market Looms with Dow Down 14.5% From High; S&P 500 Drops to 15-Month Low

The traders all spoke of a common sentiment in Thursday’s market: fear. Guy Adami said the tape was so bad that it finally felt like capitulation had gripped investors. Pete Najarian offered that there needs to actually be more fear instilled in this market to shake things up enough for a bottom to come in.

It’s about panic, Pete said. When the market looks like it’s panicking, that’s often a counterintuitive sign that a turn is coming. Pete said the CBOE Volatility Index – a measure of the price people are willing to pay to insure their portfolios – would need to reach 30 for real panic to set in. It’s getting closer.


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NO BOTTOM FOR BANKS

The headline: Merrill Lynch Sinks 10% After Posting Worst Quarterly Results In Its History; Goldman Sachs, Bear Stearns, Lehman Brothers Each Fall More Than 3%

This beating of the financials into submission is becoming difficult to stomach, but that’s exactly why investors should pay attention, according to Guy Adami. He predicts the next phase, which could mark a turn, is on the horizon.

Pete Najarian bought Lehman Brothers Thursday. Even with all the downside in the group, he jumped on albeit with a put spread to hedge some risk.

AFTER HOURS ACTION: IBM

The headline:IBM Shares Rally After Company Ups 2008 Guidance

Big Blue had preannounced its earnings earlier in the week, but the good news for the computer giant continued as the stock soared after hours Thursday on the news. As far as Jeff Macke is concerned, this bit of good news for IBM shareholders could be very bad news for the market.

Bulls will want futures much lower in the morning, giving them an opportunity to buy the dip. But IBM will likely lead to a higher open for stocks, which is exactly how Thursday’s trading began. If IBM does indeed lift the market up in the morning, view it as a “raging sell until further notice,” Jeff said.

PLAY DEFENSE WITH MICROSOFT?

The headline: Goldman Sachs Adds Microsoft To Its Defensive-Oriented ‘Americas Conviction Buy List’

Microsoft reported some of its best all-time earnings last quarter. Can it continue when MSFT reports next Thursday? Guy Adami wouldn’t expect the numbers to be gangbusters again, but they could easily be good and send the stock a few points higher. After all, IBM blew it away and Intel actually wasn’t terrible, even if the market treated it that way.

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While outright buys have become more difficult to identify, the traders took a moment on Thursday’s show to name some stocks that have landed back on their radars because they’ve come down in price.

Guy Adami has his eye on auto parts maker BorgWarner , which popped nearly 7% Thursday on a strong 2008 profit forecast. BWA is a stock indicative of a changing global economy, Guy said. Even if the U.S. is in a rut, other economies aren’t slowing. And as fuel efficiency becomes more important to automakers around the world, BWA is poised to take share.

In the sea of red that was Thursday’s market, Karen Finerman noted that retail – a group now assumed to go down pretty much no matter what – actually ended the day “not too bad.” Recession is already baked into the retailers, Karen said, and the tide could be on the way to turning. She said Macy’s , in particular, was starting to look “interesting.”

Jeff Macke pointed out Under Armour , which took a hit on some analyst rumors, is back on his radar. A stock he wouldn’t touch last summer has now come down enough to look intriguing again. UA is “yesterday’s darling coming into today’s prices,” he said.

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Trader disclosure: On Jan 17, 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 (YHOO), (INTC); Pete Najarian Owns (BIIB), (C), (CSCO), (EBAY), (ETFC), (MS), (MSFT); Pete Najarian Owns (LEH) Puts; Pete Najarian Owns (AAPL) Calls, (AIG) Puts, (WM) Calls, (YHOO) Calls; Finerman Owns (GS); Finerman's Firm Owns (PLCE); Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns Russell 2000 Puts And Is Short (IWM); Finerman's Firm Owns S&P 500 Puts And Is Short (SPY); Finerman's Firm Is Short (IYR), (IJR); Finerman's Firm Is Short (MDY) Puts And Is Short (MDY); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Is Short (HET) And Owns (HET) Puts
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Symbol
Price
 
Change
%Change
BWA
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IBM
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M
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MSFT
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TSO
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UA
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VIX
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VLO
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GS
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MS
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