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Apple 'Tablet' Just a Distraction For Traders From Big DC Risks

Traders this morning are hoping that the Apple tablet computer expected to be announced today can do it all: read books, play television, and...lift the market in the face of all the headwinds likely to bluster up from Washington toward Wall Street.

If history is any guide, a new Apple product at 1pm ET today may not be enough. Tracking the shares around the last three major product releases (original iPhone, iPod Touch, iPhone 3Gs), Apple's stock tends to hit a new high around the time of the product release and than fall back as traders take profit on the news. We're seeing that exact pattern play out now, with Apple getting to within $3 of an all-time high yesterday. For Apple shareholders, the good news is that the stock goes on to recover in the coming weeks to a new high as the revolutionary product lives up to its lofty expectations.

But that's not going to help us today. First on the Washington agenda is the 10 a.m. ET hearing by the House Committee on Oversight and Government Reform investigating the AIG bailout. Treasury Secretary Timothy Geithner is likely to face quite a grilling on his roll in approving payments to the insurer's counterparties when he was head of the New York Fed.

Today's testimony could put Geithner's fate at the Treasury this year into question, according to Josh Rosner, managing director and analyst at Graham Fisher & Co., causing traders to sell on fears someone less friendly to markets could take his place. The Treasury had no comment on Rosner's speculation.

The hits will keep on coming out of DC this afternoon with the Federal Reserve's interest rate statement released around 2:15 ET. While Bernanke's confirmation as Fed chairman later this week seems to be shored up by Congressional leaders after some vocal dissenters last week, one false move by the chairman today could throw that back into question. It will be tough for the Fed to satisfy everyone in this statement with many calling for a tougher stance against inflation, while others looking for the Fed to signal accommodative measures, such as the purchases of mortgage securities, will remain for some time.

From there, the Street's sights will turn to President Obama's State of the Union address tonight. Goldman Sachs and other financial stocks led a late sell-off yesterday afternoon as speculation that Obama would toughen his rhetoric even more against bankers in the address started to make it around trading floors. What's really got investors worried is that Obama's bank tax plan announced in haste last week is not just rhetoric, but something that will actually become a growth-restricting series of new regulation for the sector.

"If Obama's message is that he is committed to a renewed focus on the under/unemployment issue, a spirited rally in equities should follow," wrote Doug Kass, Seabreeze Partners Management President, in a note to clients this morning. "But if the President continues his tirade against the banking industry, stocks will continue to be pressured."

For the best market insight, catch 'Fast Money' each night at 5pm ET on CNBC.

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Trader disclosure: On January 27th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU), (GS); Najarian Owns (AAPL) Call Spread; Najarian Owns (CTXS) Calls; Najarian Owns (GS) Call Spread; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (XLF) Calls; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman Owns (AAPL); Finerman's Firm Owns (BAC) Leap, (BAC); Finerman Owns (BAC) Prefered, (BAC); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (KFT), (MSFT); Finerman's Firm And Finerman Own (WFC) Preferred; Seymour Owns (AAPL), (BAC), (INTC)

For Tim Seymour:
Seygem Asset Management Owns (FCX)
Seygem Asset Management Owns (TSO)
Seygem Asset Management Is Short (VALE)
Seygem Asset Management Owns (X)
Seygem Asset Management Owns (PBR)

For Pip Coburn
Pip Coburn Invests In Buckeye Delta Fund
Buckeye Delta Fund Owns (AAPL), (ADBE), (ANSS), (RIMM), Arm Holdings plc, (GOOG)
Buckeye Delta Fund Is Short (NOK), (PALM), (MOT)

For Paul Miller
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (FITB)