Market action is mixed in the early going, with FAANG stocks looking to build on Tuesday's solid gains while the DJIA and 'value' stocks are struggling again. Underneath the major indices has been some very wild pockets of speculative action in small-caps that have given the market action a bubbly feeling. That is likely to continue as traders look for the next hot play, but is narrowing as the reality of some very poor fundamentals becomes glaringly obvious.
Market players will be looking ahead to the Federal Open Market Committee decision at 2 p.m. ET, followed by a virtual press conference with Fed chair, Jerome Powell. Some new economic projections will be issued and Powell is likely to reiterate the dovish stance of the Fed and the need for even more policy accommodation.
The primary question today will be whether there is any "sell the news" response to the Fed decision. The bears keep anticipating some sort of reversal, but the market doesn't seem to be able to fully discount the flood of liquidity that has been created.
There is obviously still quite a bit of money out there looking for a place to go. The very energetic breakout by Apple (AAPL) to a new all-time high on Tuesday is a good example. This is not a stock that isn't already widely embraced, but it can still manage to act like an early-stage growth stock because there is so much capital looking for a home.
The rotation into value plays such as airlines, banks and industrials have cooled, but the growth names have stepped right back up and are leading the Nasdaq to the 10,000 level.
The most fascinating area of the market for traders is the extremely aggressive small-cap speculation. Much of the attention has been focused on bankrupt companies like Hertz (HTZ) , JC Penney (JCPNQ) and Chesapeake Energy (CHK) , but there is some other wild action like electric truck maker Nikola (NKLA) and Forum Merger II (FMCI) .
It is an interesting mix of action and many bears are trying to paint it as a warning sign of a dramatic reversal, but that is more wishful thinking than anything else. The price action is messy, but there still is no obvious sign of correlated selling.
Jerome Powell is likely to give the "don't fight the Fed" bulls some further confidence, while the 'sell the news' bears, continue to hope for profit-taking. My money is with the bulls and on individual stock picking until something changes.