Quite Simply, What Next?

There mere fact that you’ve survived this last week is an accomplishment in and of itself. The Dow recorded its worst week ever.

The blue chip index ended the week down 1,874 points or -18% for the week, that’s the biggest weekly point and percentage drops in history. (Until now there had not been a point drop larger than 1,600 points going all the way back to the Dow's inception in 1896.)

Things are just slightly better for the S&P which ended its second worst week, ever down 200 points and -18.20% for the week. (In case you’re curious the biggest percentage drop for the S&P was the week ending July 21, 1933 when the S&P dropped -18.57%)

Although a dramatic late-day comeback failed to bring these indexes into positive territory, the mere existence of a rally suggested to some that there might be light at the end of the tunnel.

After worst week ever, what’s next?

There are four prophecies that need to play out, says Doug Cliggott of Dover Management.

1) The financial sector needs to be recapitalized and hopefully that’s what the G7 does this weekend.

2) Asset prices need to come down to more sustainable levels versus income and that still needs to play out in the housing market.

3) Private sector needs to reduce its overall leverage and that’s underway but I think it’s got a long way to go.

4) Then we need to honestly and fully recognize the losses we have. Until we do private capital won’t believe it’s a worthwhile investment to come into the financial sector.

How are you trading?

“As an investor right now I’m looking for solid companies that don’t need credit to grow that have good products.” If you must be in stocks Cliggott says, “take a look at the dividend yields on some pharmaceutical stocks.”

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Trader disclosure: On Oct.10, 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 (DIS), (WMT), Finerman and Firm Own (GLNG); Finerman’s Firm Owns (MSFT), (RIG), (IYR), (SPY), (MDY), (USO) (PM); Finerman Firm Is Short (COF); Adami Owns (C ), (INTC), (MSFT), (AGU), (NUE), (GS), (BTU); Terranova Owns (AAPL), (GS), (VLO), (FTO), (X), (POT), (NOV), (FCX), (EXM), (EOG)