Weakness at the Open
    Yesterday’s poor showing from technology is carrying over into the open. Research in Motion (RIMM), Apple (AAPL) and Baidu.com (BIDU) are all down 1%. This weakness is reflecting what we have seen in both the futures and international markets. They key for today will be to see if this weakness continues. The markets have two major catalysts pending - Friday’s employment report and the December 11th Fed meeting. I expect the market to drift into these events and then react sharply to the news. Obviously, the bulls would prefer to maintain their recent gains, receive positive help from policy makers and rally into year end. We will have to wait a few more trading days to see if this playbook develops.
    For today, I will continue trading cautiously. Yesterday I initiated a RIMM/AAPL pair trade and will look for any chance to close this position at a profit. As today’s premarket action shows, now is not the time to be carrying large position day to day. Unless you have a strong view about a company’s long-term prospects, be nimble a book gains when they appear.Â
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Sean, what’s your take on the meeting that will take place on the 11th? I mean I personally doubt anything is going to happen due to the time of the year and what has already occurred in the past few months, but didn’t know what you were expecting. It also seems that with how much of a meeting the FIG has taken that anything else would only cause some more serious damage.
My sense is the Fed cuts 25bp. We may get a quick kneejerk reaction, but I think we head lower. This market is weakening. The bulls entire logic seems to be that the worse things get, the better the market will do because policy makers will solve the day. Call me crazy, but Treasury stepping into the housing market and more easy money won’t solve our problems. Only when the economy works off its excess and the markets reprice risk will we have a chance to head higher.
I agree. I think the fed just needs to let everything work it course. Otherwise things can only get worse and worse.
Sean,
So are you saying we’re heading into a recession (if we’re not already in one)? What are the odds of a 50bp cut? I’ve noticed quite a few members of the FOMC realizing how tight the credit markets are right now but I have to agree with you. Cutting won’t make things any easier. It may help bail out those that made risky investments but in terms of actually fixing anything I have no idea how it would help.