The S&P 500 whipsawed today, but ultimately ended down 0.50%.

Economic Indicators

New home sales nose dived in December, coming in at a 414K annual rate, below the 450K consensus. Home prices and weather may have been some of the main culprits, as interest rates remained low.

Tomorrow morning Durable Goods Orders are expected to increase slightly along with home prices and consumer confidence.

Fed Tapering (look out for Wednesday): Will the Fed continue to wind down asset purchases?

The Fed is expected to keep policy rates unchanged. All eyes will be on whether or not the Fed will continue to wind down its asset purchases which are now at the $75 billion monthly rate.

The Market May Keep Correcting

The market is likely to continue its correction. Although there will be some bargain buying, the market is still massively overvalued, and with the winding down of Fed purchases, earnings and revenue growth will need to continue to support current valuations. EPS can only be inflated by stock buybacks for so long, and the market is starting to realize that.

Where do you think the market is headed? Will the Fed taper more on Wednesday?