Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

After settling at record levels on Friday, stocks opened mixed this morning, with the S&P 500 down 0.04% and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI) up 0.24% at 10:18 a.m. EST.

This is an important week for Dow component Microsoft (NASDAQ:MSFT), and that could translate into some volatility in the stock -- that, at least, is what the options market is indicating, with rising implied volatility of calls expiring this month. Today, the software powerhouse's board meets in anticipation of tomorrow's shareholder meeting. Bloomberg Businessweek reported that the board aims to reduce its short list of potential successors to retiring CEO Steve Ballmer to three to five candidates in order to announce a final choice as early as next month.

That choice will be vital, as the company embarks on arguably the most ambitious transformation in its history in order to adapt to the shift from PCs to mobile computing. In justifying today's downgrade of Microsoft's stock from neutral to underperform, Bank of America Merrill Lynch cited the risk associated with the CEO succession, noting that an outsider like Ford (NYSE:F) CEO Alan Mulally could add a 10% premium to the stock, while internal candidates were more likely to produce 10% downside. Microsoft shares were down 1.48% at 10:18 a.m. EST.

That risk/reward assessment is good news if you believe another analyst, Nomura Securities' Rick Sherlund. Sherlund, who began following Microsoft when it went public in 1986, published a report earlier this month that said no internal Microsoft candidates are at the top of the board's list, with the top three candidates all coming from outside the industry: Mulally, Boeing's James McNerney, and Tyco's Edward Breen. Sherlund predicted the board would give the nod to Mulally in December.

According to the Bloomberg Businessweek report, Microsoft's board has prepared a document that describes its ideal candidate as someone with an "extensive track record in managing complex, global organizations within a fast-paced and highly competitive market sector; track record of delivering top and bottom line results. Proven ability to lead a multi-billion dollar organization and large employee base." That description is dressed up in corporate-speak, but it's clear that Mulally fits the bill. Microsoft would be lucky to get him. Investors will certainly be looking to the outcome of tomorrow's shareholder meeting for clues on this front.