Yesterday's rally, while impressive, was odd and problematic. It was led higher by the healthcare and utilities sectors, which set a cautionary tone and points to the anxiety that's anchored the rally. The good news is that the Dow could have been off 228 points and nobody would have been surprised. Yesterday, oil moving lower was good news today conventional wisdom might shift. But one thing that's clear is that it's not a sign of deflation, but there are other signs of possible deflation. This is the quandary for the market as we are T-minus one day before the Fed concludes another FOMC gathering.

Low Oil & Strong Dollar

There are certain sectors that do better with cheaper dollar which makes imported goods less expensive. Coupled with cheaper gas and it’s clear the combination may be having an impact. It’s early, but a leading candidate for stock of the day is DSW Inc. (DSW), the discount women's shoe retailer that posted strong earnings paced by same store sales of +7.6%. Guidance was solid and management hiked its dividend to $0.20 from $0.1875.

Obviously, airlines should do well with plunging oil, but other than that, the market is hesitant ahead of the open.

The Fed

The debate over the Fed altering its language today seems meaningless; if in fact the Fed changes things, it cannot make a difference. If it's come to its senses, it would fold the tent and dismantle the whole thing, but hanging around and keeping up the facade isn't going to work with hints that rates are moving higher. Their duel mandate is jobs and inflation, but ranking high as unofficial mandates and concerns are:

• Wages
• Housing
• Global Economy
• Global Markets

Today’s Session

Taking all this into consideration, this morning's housing data is a real disaster that might have the Fed grumbling. Starts crumbled to an annualize rate of 897,000, the street was looking for 1,041,000.  Permits at 1,092,000 came in slightly above the street's number of 1,070,000, but not enough to offset the shock of plunging starts. Blame it on the winter? Go ahead, but then you would be joining the masquerade.