The Dow futures are down 174 points which means we are headed towards a sharply lower open. News that General Motors (GM, $3.62, up $0.21) may be headed for bankruptcy is weighing heavily on the market. The stock has a bid of $2.87 which is looking like a 30% haircut for GM. The S&P 500 futures are lower by 19 and the Nasdaq futures are down 21.
I had talked about the possibility of the bears making an appearance this week but this was slightly unexpected. Perhaps the GM news sends a clear message and if that is the case then a bankruptcy of one of the auto makers would set the market back.
Many of the positions we opened Friday should be managed carefully. We only started “half” positions on some of our trades and this was why. The stops I mentioned in last night’s Weekly Wrap should protect us.
We should still be able to get out of Family Dollar (FDO, $33.63, up $0.45) trade with a 100% return but hold off on the solar plays and avoid adding new positions to the other trades we have open.
We will have to see how the market reacts to the news concerning GM but it appears we are easily headed for a triple-digit loss on the Dow to start the day.