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Oh great, just when I decide to adopt a "don't worry be happy" market attitude the Wall Street Journal tells me to start worrying!

Asia looked a little worried this morning as the Nikkei pulled back as Honda's profits fell 4.3% on higher costs, but they boosted full-year earnings on strong U.S. sales. Samsung was a disappointment as well. Wal-Mart and General Electric Co. (NYSE:GE) are partnering with China's Shenzhen bank to launch a credit card, so now we know why Wal-Mart Stores Inc. (NYSE:WMT) did so well this week!

Europe seems neither worried nor happy this morning. STMicroelectronics NV (NYSE:STM) reported a 133% rise in profits but guided very cautiously and spooked the chips. Infineon Technologies AG (IFX) also traded down as they took a big hit from BenQ's bankruptcy. On the whole, Nokia Corp. (NYSE:NOK) is wrecking the industry with a flood of low-cost phones and a seemingly limitless ability to provide them in mass quantities.

Mr. Jones does not worry about Europe or Japan or making new highs for that matter. In case you've forgotten, the old record was 11,750, a record that has fallen 10 times in the past 14 trading days as we added another 375 points. So will it be "Ho-hum, another new high" or "Hasta la vista 12,000" after the Fed?

S&P 25 10 06The S&P remains the reliable indicator and sits just under 1,380 and should have good support at 1,370 after spending 6 sessions using it as a ceiling.

The NYSE has been pacing the S&P step by step and has the same benefit of a firm floor being formed at 8,700 up 300 points since the Dow made it's all time high.

I so want to say the Nasdaq is forming a flag and getting ready to break out above 2,350, but the pathetic SOX just aren't letting me. Not only that but Microsoft is pulling some shenanigans with their Q2 earnings, but this "coupon" concept is just another way of saying that holiday computers will not ship with Vista, and there is no way I'm buying a computer with a coupon that "allows" me to install an entire operating system "some time" after I buy it.

I'm pretty sure that explains Hewlett-Packard Co.'s (NYSE:HPQ) disconnect from the market yesterday as Dell Inc. (NASDAQ:DELL) took a pretty big hit as well. The DELL Jan '08 $27.50s got stopped out on the drop at $2 (up 54%).

A lot of the commodity action we've been seeing could have been short-covering ahead of a possible doveish Fed statement, so I want to watch oil and gold closely after the Fed announcement. If that theory is right, commodities may have little fuel to rally with, but lots of problems if the Fed takes a tough stance.

Oil and gold are going to be all about the dollar, which is going to be all about the Fed today, but we do get an inventory report at 10:30. Expectations are for a 2.7Mb build for the week (with BP PLC (NYSE:BP) shut down, Norway shut down, Nigeria shut down and Venezuela cutting back) along with a 1.6Mb draw in distillates and a 900Kb draw in heating oil.

Also expected is a .7% increase in refinery utilization which makes no sense as last week was a 3% drop, so either the refineries stay down or oil gets used; it's not logical to assume both happen at the same time unless we are just buried in oil.

Murphy Oil Corp. (NYSE:MUR) beat estimates ($1.18 vs. $1.23 last year) but guided down to .40-.60 in Q4 vs. analysts expectations of $1.03. Somehow this will make ExxonMobil Corp. (NYSE:XOM) go up!

"Results were hurt by lower oil production, a decline in natural gas sales prices in North America and higher expenses. These were partly offset by higher sales prices for crude oil and lower hurricane-related costs for business. "

"Refining and marketing margins in the U.S. have been much weaker in the early portion of the fourth quarter compared to the last two months of the third quarter," said Murphy Oil Chief Executive Claiborne Deming in a statement.

"Crude oil prices have softened a bit... and U.S. natural gas prices also face pressures from what appears to be a very early fill of winter storage," it said.

Copper Chart 25 10 06Copper crossed back below the 50 DMA yesterday and no longer looks like it's on an uptrend. It is hard to maintain a booming global economy without using some copper!

Aside from the Fed it is all up to General Motors Corp. (NYSE:GM) today to move the markets as expectations are high, to say the least! Analysts expect GM to make .49 on each of their 566M shares vs. the $1.92 loss they incurred last Q3.

With $48B in quarterly sales, you can make your numbers say just about anything, so all bets are off here. Apparently it has occurred to no one that big profits will bring the unions down hard on GM who just spent a year telling workers how broke they are...

As a side note, Queen Elizabeth just knighted Carlos Ghosn for slaying GM in France and saving Europe from getting entangled in that mess.

We still have the GDP to look forward to this week, but, if we get that far and are still calling the Dow Mr. Jones (above 12K), then it could be a very happy holidays for the markets!

Speaking of Roach Motels, Bush's great new strategy for Iraq is... send more troops! Yeah, that's the ticket...

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I'm still on market watch today and any and all trades until we get GDP numbers are gambles and nothing more.

  • Amazon.com Inc. (NASDAQ:AMZN) says the future's so bright they've got to wear shades even though earnings pulled back 30% on 27% higher sales. The mad enthusiasm for the stock is based on the cost-cutting they're going to do, as opposed to the increasing costs they are experiencing at present. A $252M (2%) buyback isn't hurting either.
  • KLA-Tencor Corp. (NASDAQ:KLAC) did very well, which makes me nervous about Applied Materials Inc. (NASDAQ:AMAT) puts; tight stops there!
  • Corning Inc. (NYSE:GLW) doubled last year's Q3 profits to $438M, beating expectations by 2 cents. LCD sales were booming (Best Buy Co. Inc. (NYSE:BBY), Circuit City Stores Inc. (CC)) with a strong Q4 projected there, but not so hot on Telco guidance. This is no reason for a sell-off and I will be looking for a buying opportunity here! GLW was at $29 in May...

Corning makes 55% of the world's LCD glass, and they say 42M LCD TV's are being shipped this year vs. 20M last year. 45% of those sales come in Q4.

GM beat by a mile! It will be interesting to see how far this goes today. Will Tracinda take this opportunity to make a graceful exit? Beware the real numbers, reading their statements is like reading the U.S. budget -- a billion here and a billion there really adds up to shenanigans!

  • DaimlerChrysler (DCX) had a beat as well so it seems more like people are just buying cars rather than GM is managed by turnaround experts.
  • Mega Japanese broker Nomura had a 29% drop in net income, blaming strong competition from Goldman Sachs Group Inc. (NYSE:GS). It will be interesting to see if GS made sacrifices to get these deals.
  • Noble Corp. (NYSE:NE) had a great quarter, but it is likely to come at the expense of others as rig rates were $291,000 a day, versus $127,000 a day last year. Let's keep an eye on costs for the oil producers but it seems that GlobalSantaFe Corp. (NYSE:GSF) (11/1), Transocean Inc. (NYSE:RIG) (11/2), Diamond Offshore Drilling Inc. (NYSE:DO) (10/27) and TODCO (THE) (11/2) will have a hard time missing.
  • Remember RealNetworks Inc. (NASDAQ:RNWK) (11/6)? They won a $780M lawsuit against Microsoft for ripping off their media player but now what? They are Apple Computer Inc.'s (NASDAQ:AAPL) main competitor in music downloads with Rhapsody, but the company has to hope Sony Corp. (NYSE:SNE) or SanDisk Corp.'s (NASDAQ:SNDK) players gain some traction because iPods can't access them. I see this as a roundabout way to play a holiday surprise by one of the other MP3 companies with the Dec $12.50s at .55.
  • Boeing Co. (NYSE:BA) came in with a small beat but not great so it will probably follow the markets, not lead them...
  • Goodyear Tire & Rubber Co. (NASDAQ:GT) has really low estimates (.24) compared to last year's .60 and makes a nice play on lower oil costs. There is a strike that has been keeping shares down, and it could really take off on a settlement. I like the Jan $15s for $1.05 with a .90 stop.

Here's a nice article on risk trade management thanks to Trader Mike.

Stay flexible today, oil at 10:30, Fed at 2:30 -- big day!

Read all of Phil Davis's articles on Seeking Alpha.

Source: Options Trader: Wednesday Morning Ideas