Market may drop big after Fed meeting.

Several reasons:

1. There won\'t be a big rate cut, maximum 0.25%.

Reasons:
a. most of the other big economies held their rates steady or hiked their rates;
b. oil price is at record high;
c. Fed is still playing down the effect of the subprime mess on the whole economy despite some early symptoms of economy slowing down.
All of these squeeze Fed\'s room to cut rates big.

2. Fed will indicate that it will take further actions if things get worse. But this won\'t bring too much relief to the market sentiment.

Reason: The Fed has been saying this act when needed over and over. But, if Fed\'s real action is small, which is manifested by its real action, investors start to lose confidence in Fed, and will be more inclined to believe that the Bernanke Fed has little intention to save the market.

3. Big financials will report their earnings next week. It is expected things can be very ugly.

Reason: the financials cannot sell their bonds, but meanwhile they have to stock a lot of cash for bad debts. This is simply the worst scenario for investment banks. Everyday they are not losing big while earning very little. Companies with their business in US will suffer the most.