Monday Morning Musings

After a bounce near the open, the indexes are lower in the first hour of trading on economic concerns as well as investors awaiting further developments regarding the possible bailout for the automakers.

The FOMC begins its 2-day meeting today, and will announce its rate cut decision tommorrow. The market is roughly split between expecting a 50 basis point or 75 basis point cut. Either way, that will take the fed funds rate well below 1.0%, a rate I never thought I would see in my lifetime.

In corporate news:

• Aetna (AET) reaffirmed its earnings outlook for 2008
• Totota (TM) said will will cut its sales goals by roughly 1 million vehicles in 2009
• Honeywell (HON) reaffirmed its outlook for 2009
• Beijing unveiled a plan for easing financial conditions that could include increasing the money supply

Oil is spiking this morning, trading as high as $49.50, aided by dollar weakness. Gold is also trading higher. The 10-year is another 5 basis points lower to 2.53%. And the VIX is +5% higher to 57.18.

The market closed on a positive note Friday, and continues to consolidate just below its overhead 50-day moving average. The market is getting closer to working off its overbought condition, and the setup still looks favorable for a year-end rally. This week is options expiration week, which means there could be a couple of volatile days, but I am readying my buy list.