The Fed's Coming Moves Will Likely Make for a More Volatile Market

Strong third-quarter earnings and a weaker dollar helped the Dow to a nifty 3% rally in the last couple of weeks, but don't be surprised if further gains are harder to come by in the days ahead, says Joe Greco, managing director at Meridian Equity Partners.

Volatility started to pick up in the last few sessions, and now that a downbeat Federal Reserve Chairman Ben Bernanke has made another round of stimulus all but certain, the market is "beginning to realize that there are some bigger issues coming to fruition," Greco says.

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Traders have had ample time to price in a second shot of the Fed's so-called quantitative easing, Greco notes. With the actual Fed meeting (and midterm elections) now just two weeks away, it's fairly likely that the bears will start growling again.

"Bernanke spoke Friday morning, and that resulted in a sell-off," says Greco. "I think that's really the catalyst that's going to move things back lower and give all the bears who [increased their short positions] over the last few weeks an opportunity to cash in a little bit on their positions."

For more on Greco's view from the floor of the New York Stock Exchange (NYX), see the video below.