A Tough Balance

Good morning. Premarket futures are positive amid hopes that yesterday's rainbow reversal was overdone. Some new M&A activity (see HUN & VMSI) and upbeat commentary from analysts concerning the subprime fallout this morning has helped early sentiment. Like the past few days, sentiment can change upon the receipt of the next rumor and headline.

Reports today on new home sales and consumer sentiment at 10:AM will help investors determine the extent of the housing slump and its effect on Americans' confidence. Ahead of the FOMC meeting, the market desires economic data that is good enough to suggest the economy remains strong while not so strong that would enable the Fed to increase interest rates. A tough balance to be sure, but a balance the market has accomplished pretty consistently for some time now.

I'll be on the hunt for a few short-term trades (nothing aggressive) depending on how the economic data is received at 10:AM. Have a great day!