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Dow Dives 367 Points

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Blockbuster tech earnings were not enough to save the market Friday, as the major indexes crumbled on the 20th anniversary of the 1987 crash. Here’s what happened.

MAJOR INDEXES CLOSE OVER 2.5% LOWER:

The headline: Stocks Drop Most in 2 Months After Bank, Industrial Earnings Reignite Recession Concern

Caterpillar’s (CAT) statement that Fed rate cuts wouldn’t help the economy scared investors, Guy Adami said. But pullbacks are “healthy” and he remains encouraged even in the face of Friday’s action.

Karen Finerman’s firm didn’t buy much Friday and they're hanging onto puts for protection – even though they usually sell puts when the Volatility Index (VIX) ticks higher.

Unfortunately, we wouldn’t know if we are in a recession until it’s too late, so it doesn’t hurt to take down some exposure on days like this, Karen said. At the same time, investors can use days likes this to look for opportunities to get into stocks that have become cheap because of the overall pullback.

Pete Najarian echoed Karen’s protectionist attitude. When volatility gets up to 15% or 16% it is time to get a little defensive, he said.

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With that in mind, this sell-off feels much less driven by panic as compared to the plunge the market took this past summer, Karen said.

The problem is better defined, Jeff Macke said. Whether or not that’s a good thing is yet to be seen.

OIL BREAKS $90:

The headline: Crude Crosses $90 For First Time, Then Gives Up Gains to Finish at $88.60; Gold Retreats From 27-year High as Dollar Regains Ground Against Euro

Oil reaching $90 is “big,” commodities guru Dennis Gartman said, joining the panel by telephone. However, the record levels in oil are less a demand issue and more a political issue this time around, he said. The instability in Turkey is unlikely to worsen and he thinks the market will see $75 oil sooner rather than later.

On the flip side, Guy Adami noted that for the first time in a while, there was not a flight to quality in gold as oil peaked. He thinks the next $8 to $10 in oil will be to the downside.

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Gartman said he would be “demonstrably less long” gold and oil in the near future. If we’re headed for a recession, and Gartman thinks “we may already be in one,” both commodities are overextended.

THE INDUSTRIAL DEVOLUTION:

The headline: Industrial Stocks – the Best Friends of Global Growth – Take Major Hit Friday

Honeywell (HON) only missed estimates by a penny and raised its guidance – but the stock got trounced. Guy Adami thinks the market sold it off in sympathy with Caterpillar (CAT) and other industrial names that seriously underperformed. Honeywell around $55 is a buy, he said.

THE INDUSTRIAL DEVOLUTION

Schlumberger (SLB), the oil services giant, took a hit and will probably see more downside, Guy said, but he would still buy it.

TECH’S RECORD QUARTER:

The headline: After Blockbuster Week, Tech Stocks on Pace For Most Profitable Quarter Ever

SanDisk (SNDK) was down 15% Friday, but put it on the radar screen, Guy Adami advised. He thinks it hit a short-term bottom.

Pete Najarian agreed with the flash memory call. SNDK could easily be an acquisition target with the stock so low, he said. All the device makers are interested in flash memory and he thinks any of them would be natural buyers.

TECH'S RECORD QUARTER

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Trader disclosure: On Oct 19, 2007, 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 (ATVI), (EMC), (INTC); Najarian Owns (C), (CY), (GOOG); Finerman Owns (GS); Finerman Owns PHLX Oil Service Sector Index Puts; Finernman's Firm Owns (ASD), (TGT), (MO), (BIIB), (MSFT), (WMT); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm And Finerman Own (HD)

Gartman Owns (SDS), (DXD), (YZC), (UNG), (SJT), (TOWN); CIBC Gartman Index Owns Crude Oil, Wheat, Corn, Soybeans; CIBC Gartman Index And Gartman Own Gold