Early Look: Italy's Downgrade Priced In

The market was slightly lower in early trading, but has since bounced back into positive territory. Asian markets were lower overnight, but Europe was actually higher this morning.

Europe's rally is somewhat surprising given that Italy had its debt rating downgraded last night by Moody's. Speculation about this downgrade has been talked about since last week, so it wasn't a total surprise. And news that Greece is closer to an austerity plan that will help them secure aid seems to be trumping the news on Italy today.

Healthcare stocks are leading the early action, while industrials are lagging. The dollar is also lower today, helping to push oil prices back towards $86.60 and gold prices back above the $1800 level.

The Fed will start its 2-day meeting today with its latest policy statement tomorrow afternoon. There is a lot of chatter about 'Operation Twist', so we will have to see how much detail the Fed gives us as well as their expectations for what they think this will accomplish.

The SPX is still trading below its 50-day average resistance, currently around 1223. For its part, the Nazz is enjoying its thirds straight day above its 50-day and showing relative outperformance over the SPX recently.

Trading comment: Yesterday, while the overall market was lower there was a growing handful of growth stocks bucking the broad weakness and trading higher. This is a positive sign for the bulls, and could continue into quarter-end as portfolio managers look to add performance after underperforming recently.