Mixed Open Ahead of Bernanke

Good morning. M&A activity in the metals industry (RTP), more earnings reports (CSCO, F, AIG, NWS, HANS, TOL, & FSLR), and monthly retail data are keeping investors very busy this morning.

At 10AM Bernanke will give his economic outlook to the Joint Economic Committee in Washington. For what it is worth, in spite of similar cries for interest rate cuts overseas, the European Central Bank left rates alone this morning. Premarket futures have been volatile and currently point to a mixed open.

Premarket gainers: FSLR, RTP, TRLG, FOLD, ESLR, HEES, JASO, SRVY, ENER, AAUK, ASTIZ, YTEC, ASTI, CSIQ, GRRF, CTRP, SPWR, SCUN, DSTI, AKNS, NTWK, CY, SOLF, HOKU, CTRP, RMBS, GOLD, RIO, AAUK, SPIR, GMCR, CTDC, FCX, ASGN, BLDP, PRXI, PLCE, GIGM, PCU, VPHM, ICFI, EGLE, URBN, ESPD, KNOL, FWLT, MICC, VRTX, and ACAS.

Premarket losers: KNXA, HANS, ZUMZ, GPCB, THOR, NTES, ARAY, MDR, BID, TMTA, RATE, CSCO, AMKR, TOPT, GIVN, SXCI, IVZ, CRNT, CIEN, AMCN, JNPR, FFIV, and LWSN.

The market has been handed a lot of bad news recently. Although most of it we've seen coming for awhile (dollar, oil prices, subprime, etc.) it hasn't started to really matter until now. It kind of reminds me of the boiling frog story that states that a frog can be boiled alive if the water is heated slowly enough. Rising oil prices, the falling dollar, lukewarm reception to earnings reports, and uncertainty concerning the financials have created a slow moving storm. While hope remains that Bernanke can turn off the stove just in time to cool the water, even though the problems we're facing with oil prices, the dollar, housing market, and both moral and real hazards in the financials are a direct result of the Fed's easy money actions.

Like many of you, I'm confident we'll sort through this mess and get the economy and market back on track. Low valuations and the fact that most of the bad news is already known will help us find a tradeable bottom in due time. Until then, our number one responsibility is to weigh the risks and rewards and make our decisions based on reality than blind hope. The market's perception about these risks are starting to finally change and while it is too early to say whether that will continue for longer than a few weeks, we have to keep our defensive mindset in place for as long as that is the case. The good news is that the market tends to offer the most opportunities when no one wants to look for them.