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What traders should look for in Fed statement

On Wednesday the Town Crier—Janet Yellen—will take to the podium to announce the latest thinking from the Fed brain trust.

She will also take the time to answer some questions about current and future Federal Reserve policy and guidance. Traders and investors will be waiting to hear a date, a time and place for when central bankers will begin to task of raising rates.

OK, come on: Does anyone think that she will come out with any specific "strategy"? Look, she has already spelled out what needs to happen for rates to rise.

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What traders and investors should be looking for on Wednesday is any hint or change of language that gives Yellen and her compatriots the ability to interpret the data in a different way. Essentially this would offer her cover in the event that A, B & C are not happening, yet she still finds it necessary to begin the process of raising rates.

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This is fairly remote in my opinion. Even with expanded interpretations, I still do not believe that rates are moving higher anytime prior to late spring/early summer 2015 ... which now is only eight months away. (Funny how that works right? With each passing month, we in fact get one month closer to launch date.)

There are not likely to be any surprises at all. We know that the Fed will taper another $10 billion. That will leave only $5 billion a month in stimulus, which by all accounts is due for elimination at the October meeting.

At that point we will be seven months away from late spring/early summer. And that is only one more month than what she meant by "considerable time."

Read MoreA Fed phrase change could mean rate hikes sooner

So the question on Wednesday will be: Do we think that the economy will be on a path of sustainability by May/June 2015? Surely if the data continue to be mixed to better, then yes. But if the data shifts into low gear, then no … which then pushes low rates out until late summer/fall 2015.

Either way, traders will be listening intently to the language as investors remain convinced that current policy remains solidly in place.

The reason for the change in language is simple. Recall the confusion that was created after the March 2014 Fed announcement when she suggested that rates could remain low for a "considerable time"? Everyone and their brother were running to define it.

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The talking heads tried to suggest what she meant. Meanwhile the algorithms began throwing a temper tantrum tripping over each other trying to hit bids under the assumption that "considerable" meant sooner rather than later. Longer-term asset managers who took advantage of the weakness as the algorithms panicked were licking their chops happy for the confusion that her language created for all of those "smart algos."

As the market continued to come under pressure—Yellen came out a week later and said that she thinks the U.S. job market is still underperforming and will continue to keep rates low for "some time." Those remarks sent a reassuring message to traders. The algorithms switched sides and BOOM: it was off to the races.

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This week we are due for a slew of macro economic data. Monday brought us industrial production and capacity utilization; both disappointed.

Over the weekend China's industrial production disappointed, with GDP estimates coming down for the second largest economy in the world. Europe just launched a massive stimulus package to try and stop the bleeding. So is this setting up for the U.S. to raise rates in the middle of continued global struggle?

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With each data point traders, analysts and the rest will try to decipher what it means for Wednesday's announcement. But unless the numbers are vastly different than expectations, the data mean nothing to this month's Fed meeting.

The Fed is not changing its thinking on Wednesday because of what it sees on Monday and Tuesday alone. Those conversations have already happened. This two-day meeting is all about how to rewrite the announcement to reflect new interpretations and give the Fed a little leeway in managing expectations.

Commentary by Kenny Polcari, director of NYSE floor operations at O'Neil Securities. He is also a CNBC contributor, often appearing on "Power Lunch." Follow Kenny on Twitter @kennypolcari and visit him at kennypolcari.com.

Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.