What the Fed Could Say

The Fed will release its statement around 1:15 p.m. this afternoon. (Could be a few minutes earlier.)

As I tweeted earlier, I expect an acknowledgement that the economy has improved as well as an update the Fed's debt purchase programs. There will be no rate hike.

I'm specifically looking for a change to the phrase "the pace of contraction appears to be somewhat slower." We are seeing multiple signs that the pace of contraction is clearly slowing. Yesterday's existing home sales data was just the latest of "less bad" economic indicators. This is why the OECD raised its forecast for 2009 and 2010 this morning.

It's also worth noting that the guidance from Oracle (ORCL - Snapshot Report) was better than anticipated and the numbers from Kroger (KR - Analyst Report) appear to be pretty good.

I would be cautious about trading stocks before the statement is released because it's hard to predict how the market will react afterwards.

This said, if the statement contains the changes I'm predicting, I would use the opportunity to look at companies that could benefit from a rebound. Such stocks include National Semiconductor (NSM - Analyst Report), IBM (IBM - Analyst Report) and Weatherford (WFT - Analyst Report).