Will The Fed Make Any Surprise Announcements?

The market is lower in early trading, but given the outsized rally in recent days, some profit taking is in order. Also, the market is now overbought once again, so some consolidation would be healthy and lead to further gains down the road.

The FOMC meets today, where they are expected to leave rates unchanged between 0.00% and 0.25%. Their statement will be interesting to see if they make any comments about any new programs, or the progress of the TALF program that starts this week.

In corporate news, IBM may buy Sun Microsystems (JAVA) for $6.5 billion in cash. Adobe (ADBE) reported strong earnings and its stock is rallying. And Coke (KO) was denied by the Chinese govt. from buying a large Chinese juice maker for $2.4 billion. Protectionism?

Asian markets closed higher overnight. The dollar is lower today, but that is not helping commodity prices. Oil is trading lower, below $48. Gold is testing the $900 level, and the Baltic Dry Index is down for the 5th straight day.

The 10-year yield is lower to 2.97%. And the VIX is +2% higher to 41.63, hovering just above its 200-day, which looks like it could give way on the next rally.

Trading comment: This pullback is mild so far, and it is only day 1. I am still looking to add some long exposure, even as that is becoming a crowded trade. But it has not paid to chase stocks higher in this market in well over a year, and with the SPX still below its 50-day average, I don't think the train is leaving the station just yet.