Indecision Rules Before Today's Fed Meeting

Scans today reveal that a very large number of stocks have moved up to tag the under belly of their respective 50-day averages. Meanwhile the major indices have yet to break their downtrends and are trading very close to resistance. Overly bearish sentiment kept a floor under the market yesterday but now we have extremely mixed readings. S&P options traders are extremely bearish, having purchased 4 puts for every 1 call option. QQQQ options traders on the other hand are getting a little too bullish once again. What we have here is a market that can go either way. Either stocks are going to break their respective downtrend lines and start moving back up in a continuation of the relief rally, or we are on the verge of another leg lower. The problem we face today is that virtually no one knows what is going to happen. The market is going to turn on today's Fed meeting and fireworks after the notes are released are probable. Doing anything in front of this meeting with this type of market set up is a gamble that will very likely not pay off for anyone. We would not be at all surprised to see the market move wildly one direction at the time of the Fed release, only to swing back wildly in the opposite direction as the comments are parsed and digested. Bulls and bears are both likely to get burned in the storm so it is our advice to just step back and stay away. We have some open half-sized positions. At this time it is best to just keep open position sizes small allowing for flexibility to react once the dust settles and there is once again an exploitable advantage. Oil stocks and some of the metals have thus far been holding up better than the broader market. It will be interesting to see how these sectors respond to the Fed today.