Hurry Up And Wait

The market has a negative bias to it this morning, after yesterday's huge rally. The productivity number that was released this morning was a bit below consensus. Hopefully the Fed is paying attention.

Some are saying that the market rallied yesterday because investors are anticipating the Fed making comments about the state of the credit markets. I think it was more that the market had gotten very oversold, and investors took profits on their shorts ahead of the FOMC meeting to lock in profits and reduce risk.

There is a bit more short covering going on this morning in the mortgage stocks, but insurers are lower after a weak earnings report from Marsh & Mclennan (MMC). Nonetheless, the brokers are higher this morning, which is a good sign.

Of course, none of this means very much, as the real fireworks won't come out until after the FOMC announcement at 2:15 EST. I think the Fed will make some sort of subtle comment about the credit markets, but I doubt it will be the kind that the bulls are hoping for.

I still think the market can continue to rally from oversold levels, and due to the overbalance of negative sentiment. Unless there are some real surprised from the Fed, I don't think it will have a lasting affect on the tape for more than a day or two.