As October winds to a close this week, we have a lot of unsettled business to handle in the markets between now and Friday. Traders across the globe are looking for a bottom, politicians are looking for that final push to get elected, and the average American is looking at their bank and retirement account statements in disbelief. This leaves us with the never-ending question of the markets: Where do we go from here?

Well first, lets look back to the end of last week. When those of us in the U.S. woke up and checked the news or our computer monitors, we learned that the major market futures here were "Limit Down". This means that in the pre-market, the futures had fallen as far as they could before live trading commenced at 9:30 AM ET.

Like most other contrarian investors, I was elated. Finally my plea for a huge capitulation moment had come and we could begin to look bullish. WRONG. That's what happens when you let your emotions get involved with your relationship to the markets. Luckily I was disciplined enough to not trade on that emotion once I saw that the panic truly wasn't there and the day's events were overblown.

Fed Fun(ds)

Now looking forward, we have two HUGE economic events this week. The first happens Wednesday afternoon as the Fed will announce their next decision on interest rates. We currently sit at a 150 basis point fed funds rate, or 1.5%, and the futures market is currently pricing in a 50 basis point rate cut, which would bring the rate down to 1%.

To put the current market sentiment into perspective, we can look at the longer term Fed Funds Futures for March 2010. Traders are pricing rates 18 months from now at 97.875. That means they expect the rate to be at roughly 98 basis points, or 1%, unchanged from their expectations for this coming Wednesday.

The Fed move this week will likely do little to stem the economic tide in the short term, but it should help to promote progress into late 2009. The only big move you could see in stocks out of this would be a rate cut lower than 50 basis points. If they cut less than that or nothing at all, expect a large sell-off in the broad markets as a sign of disappointment.

GDP

On Thursday, we have the first release of the GDP numbers for the 3rd quarter (Q3) of 2008. Economists are mixed as to whether the number will be negative or positive, but they all agree that we will see a sharp decrease in the number. GDP numbers are often revised multiple times in the future, so this is only an initial estimate.

If the GDP number comes in as positive, it will show signs that this economic slow down could linger into early 2010. This would be very bearish. If the number shows negative growth, there could be a short term sigh of relief that the U.S. economy is more resilient that previously thought. England has already reported negative GDP last week, and the prevailing sentiment is that we are next in line.

Light at the End of the Tunnel

This series of news could be good for the markets, as we are in the midst of earnings season right now. Almost no stock has been trading on fundamentals, but rather fear and distrust.

If we can get investors to focus on the fundamentals of the economy, whether good or bad, that would help traders to get a grasp on where we truly stand, and therefore where we are likely to go in the future. Keep your ear to the ground this week so you don't miss the stampede of bulls or bears running past you.

Price Headley is the founder and chief analyst of BigTrends.com.