The Week Ahead: eXtreme Fedstering

This week sees the last meeting in 2012 of the Federal Open Market Committee. This is one of the high profile meetings, with an announcement at 12:30 p.m. Eastern on Wednesday, followed by FOMC member forecasts at 2 p.m. and Chairman Bernanke's news conference at 2:15 p.m.

If you love extreme monetary policy, this is your week.

The Fed under Bernanke has become so open, the meetings often seem anti-climactic. Still, they're sort of like a corporate earnings announcement -- there's always room for a surprise, so they bear watching.

The econ week (the part that counts) begins Tuesday with international trade at 8:30 a.m., continues through producer prices and retail sales, both on Thursday at 8:30 a.m., and culminates on Friday with the consumer price index at 8:30 a.m. and industrial production at 9:15 a.m.

This is also the penultimate week in the life of the December options. My practice is to close positions on Friday of the week preceding expiration week. The last day to trade the options is Dec. 20.

Leading indicators out this week (in order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, moved to Friday 4:30 p.m. because of the holiday, from the Federal Reserve.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Thursday.

Other reports of interest:

Wednesday: Import and export prices at 8:30 a.m., petroleum inventories at 10:30 a.m., and the Treasury budget at 2 p.m.

Thursday: Business inventories at 10 a.m.

I also like to keep an eye on the Baltic dry index of world shipping, updated daily.

Trading calendar

By my rules, as of Monday I can trade January short vertical spreads, butterfly spreads, iron condors, and the short legs of calendar and diagonal spreads, as well as March single options and straddles. Of course, shares are good at any time.

Good trading!