Good morning! The market nearly seemed to forgot it was open on Monday. The volume was pretty light ahead of Tuesday's Fed meeting. No one seemed to really want to place any strong bets at the beginning of the week, showing a lot of caution following Friday morning's strong upside. The main strength throughout the session came from oil services and energy companies following Exxon Mobil's nice earnings. While XOM didn't get to far after its morning gap, however, many of the other companies in this group saw a strong trend day.

The activity intraday was extremely high risk as a whole on Monday. Following the Dow out of the open was like watching a food processor set to chop. This narrow range narrowed further as the morning progressed. The bias was slightly lower, but turned around after three sloppy moves within the range on declining volume.

While the 12:00 ET reversal period held very well, there wasn't a lot to really shake things up over lunch. The S&P500 led, but within 30 minutes all three of the major indices were once again stuck. The NASDAQ simply could not get beyond morning highs as many traders apparently decided to go the movies or take an extended siesta over noon. There was a bit more activity into the close, but nothing dramatic. The upper trend channel in the Dow's 30 minute triangle held and a base along the 5 minute 20 sma broke down into the 15:00 ET reversal period, leading to a retest of morning lows across the board and a break of them in the Dow.

The primary focus in Tuesday's session is the day's FOMC meeting. While it's anticipated that the Fed will raise rates by another 25 basis points, investors are curious to see what happens as the Fed passes the torch onto Bernanke as the new Chairman. Of particular interest will be how it proceeds in terms of the forward-looking language that has been the norm recently. It has helped guide the public's expectations in terms of future rate changes and it has been widely debated as to how far this strategy will be used from this point onward. There is much speculation as to whether or not the Fed may be done raising rates for the time being and the market is anxiously awaiting the Fed's accompanying statement.

A typical Fed day begins with upside into the morning. Things slow down dramatically over mid-day as the morning activity dies down. Risk increases into the early afternoon, particularly in the 30 minutes before the 2:15 ET release. This is then followed with three waves of reaction and counter-reaction. The initial move out of the Fed will usually reverse. At times this second move is even stronger than the first. Then it tends to swing back to the initial trend. I do feel that this Tuesday's session is going to begin even more slowly than usual. Over the past year the reaction to the Fed has been more muted than in the past due to the additional language that has been added to the Fed statements. If this changes then we can again see a return to the more extreme post-Fed announcement moves intraday.

Remember: As this earnings season progresses, be sure to pay closer attention to when earnings are due for any open positions you may have. While there are exceptions, it can be quite dangerous holding a shorter term position into an earnings announcement.

Economic Reports and Events
Jan 31: Employment Cost index for Q4 (8:30 am), Chicago PMI for Jan (10:00 am), Consumer Confidence for Jan (10:00 am), FOMC policy statement (2:15 pm)
Feb. 01: Consumer Spending for Dec (10:00 am), ISM Index for Jan (10:00 am), Crude Inventories 01/27 (10:30 am), Auto Sales for Jan (12:00 am), Truck sales for Jan (12:00 am)
Feb. 02: Initial Claims 01/28 (8:30 am), Productivity-Prel for Q4 (8:30 am)
Feb. 03: Average Workweek for Jan (8:30 am), Hourly Earnings for Jan (8:30 am), Nonfarm payrolls for Jan (8:30 am), Unemployment Rate for Jan (8:30 am), Mich. Sentiment-Rev. for Jan (9:50 am), Factory Orders for Dec (10:00 am), ISM Services Jan (10:00 am)

Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stock's earnings date before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
Jan 31: ACE (A), ADM (B), ADPT (?), ASD (B), ARTG (?), ASYT (B), ATML (4:01 PM ET), AX (?), CAM (B), CCJ (?), CB (A), CEG (?), CFC (B), CHIR (A), CIN (?), CME (B), COCO (B), CYMI (A), ELN (B), ETR (B), FLEX (A), GOOG (?), HLT (B), ITW (08:00 am ET), RX (B), ISSX (A), JBLU (B), K (B), MDRX (A), MO (?), MRK (B), PBG (B), PCAR (?), PD (B), PWAV (A), SEPR (B), SIE (A), SGTL (A), STN (?), SYMC (?), TE (B), ERICY (01:30 am ET), ALL (A), X (?), VLO (?), WDR (B), WYE (?), ZHNE (A)
Feb. 01: ADS (?), AEP (B), BUD (?), BOBJ (?), CBT (A), CDNS (?), CCK (A), CYTC (A), DVN (B), DRIV (A), DUK (07:00 am ET), EMKR (A), EQR (?), FDG (?), FORM (A), HCA (?), HNT (B), ITG (B), JDSU (A), JLL (?), JKHY (A), KYPH (?), LM (B), MTSN (?), MCRL (A), MNST (B), MUR (A), NWRE (A), PNW (?), PBI (A), PPL (?), PHM (A), REG (A),  SIRF (A), SFN (A), SUN (A), SBUX (A), TSRA (A), BA (B), TWX (B), TRB (B), UGI (?), XEL (B)
Feb. 02: AGN (?), AGU (B), ALA (?), AMZN (?), APA (?), ASN (B), AVP (?), AZN (6:00 AM ET), BKHM (?), CPKI (A), CTL (B), CERN (?), CLX (?), CMCSA (B), CVS (B), EFX (B), ERTS (A), EOG (?), EOP (B), GTW (?), GGC (A), GR (B), HPC (B), IP (B), ISRG (A), ITWO (B), IMGN (4:01 PM ET), ITMN (?), KSU (B), MEDI (B), NEW (B), ONNN(A), PNR (?), PEG (B), RTN (B), ROH (B), RGLD (B), TSG (B), SFNT (?), SCUR (A), SLE (B), STA (B), SPF (A), HOT (B), STXN (A), SSP (B), TSO (B), TMO (B), TXU (?), TYC (B), WCC (B), WEBX (A), WHR (B)
Feb. 03: AXL (?), BEAV (B), KTC (2:00 AM ET), MCO (B), MYG (?), NLS (?), R (B), THQI (B), WFT (?), WEN (?), WY (B)
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.

Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.