Good morning! I've heard from a couple of trader friends today that have implied that I have actually managed to luck out with my timing for missing out on the market recently. Trading has been very choppy and so far this week it's also been very volatile. After a wild swing on Monday, things slowed considerably on the dawn of this week's two-day FOMC meeting. Rising oil and energy prices helped push the Dow Jones Industrial Average and S&P 500 somewhat higher, but it was not a smooth move.

The market experienced a mild gap out of the open, but closed it very quickly. The lows that were established on that pullback served to hold the market for the remainder of the session. The indices popped somewhat after 11:00 ET, but after that they fell back into a range on the 15 minute charts and held it into the close. The Dow ($DJI) managed to gain 32.53 points on the day, with the S&P 500 ($SPX) climbing 8.20 points and the Nasdaq Composite gaining 7.55 points. Among the top gainers were ALGN, CNET, CGEN, TEVA, CNW, FHN, and GYI. Tops losers were MMM (slowing earnings growth), LXK, GNSS, TEN, and THO.

Action on Wednesday should continue to remain slow throughout much of the day. On a typical Fed day there is usually a it of action in the morning for the first hour or so. Then things slow down dramatically over noon. Since the market is already really slow heading into the day, however, that action may be more limited than usual. It should be a bit better than Tuesday though. Few expect any change in the current rate of 5.25%, but market participants will be watching to see what type of language accompanies the announcement to get a feel for how the Fed views the current economy on inflationary data.







In the past, a typical Fed announcement day began with a bit of upside in the morning, but over the past couple of years this has not held true as often. It's still better than a 50/50 chance though. Over mid-day the risk for new positions will increase dramatically. Directly after the announcement the volatility will increase again. There are typically three waves of reaction to the Fed. They can take place on both the 1 minute time frame in the immediate aftermath and then another three-wave reaction on the 5 minute time frame. There is the initial momentum, a counter-move which may be stronger than the first, and then a third move back in the initial direction. In the first several minutes following the announcement the surge in volume can easily disrupt the accuracy of the quotes traders are receiving, so use some additional caution at this time!

Economic Reports and Events This Week
Monday: ...
Tuesday: ...
Wednesday: Employment Cost Index, GDP-Adv., and Chain Deflator-Adv. for Q4 (8:30 am), Chicago PMI for Jan. (9:45 am), Construction Spending for Dec. (10:00 am), Crude Inventories 1/26 (10:30 am), FOMC Policy Statement (2:15 pm)
Thursday: Personal Income, Personal Spending and Initial Claims (8:30 am), ISM Index for Jan. (10:00 am), Auto and Truck Sales for Jan. (5:00 pm)
Friday: Nonfarm Payrolls, Unemployment Rate, Hourly Earnings, and Average Workweek for Jan. (8:30 am), Factory Orders for Dec. (10:00 am), Michigan Sentiment-Rev. for Jan. (10:00 am)

Key Earnings Announcements This Week
Monday: ...
Tuesday: ...
Wednesday: AL, AGN, ADS, MO, AVB, BOT, CRUS, CEG, CCK, CUTR, DLLR, D, DOV, EK, LLY, FDRY, GILD, GOOG, HLIT, HES, HOLX, HYDL, JDSU, MCHP, PHM, SEPR, SLAB, SBUX, SRI, STE, SUN, TSRA, BA, VRSN, WEBX, XEL
Thursday: tba...
Friday: tba...
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance and Briefing.com. 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.