The market was looking for a party, but the Fed wasn’t in the celebratory mood.  It seems before every new Fed announcement on rates there are predictions that we’re in one and done mode.. or maybe one and another and done mode, or…  ah well, predictions never mattered anyway.  What’s important is that it’s clear the Fed doesn’t have any idea what the future holds as all decisions appear to hinge on the fluctuation of commodity prices, which as we know can be quite volatile.  The market was hoping for some sense of certainty today and once again didn’t get it and the market immediately sold off as volume picked up. While today’s negative technical action is fairly significant, we’re by no means in danger of breaking down.  Rememeber, that the first move after a Fed announcement is often misleading, so we’ll need a day or two to get a true sense of this market will hold up after the latest Fed decision.  Here’s a quick look at the charts:

You see the Nasdaq remains in consolidation mode, but the fact it has had 2 failed breakout attempts in addition to multiple distribution days in the last 2 weeks is a concern.  However, support levels remain intact, so we shall see.

In both the Dow and S&P, there remains quite a bit of wiggle room left before we need to be at all concerned.  Following today’s move, that momentum will most likely continue in the coming days and a test of support is a great possiblility.  Keep an eye on these key support levels.

We find ourselves again on the doorstep of another major market breakout with the little bear on the shoulder saying "its gonna fail again, its gonna fail again".. I suppose the bit of uncertainty and fear of past failures is healthy and a necessary component of any bull run.  If I look just at price performance in the indices, I do the like the market here and think it has some legs, but the volume behind the moves of the past 2 days just doesn’t have me tripping over myself to push the buy button.  I’ll go ahead and insert the old cliche "cautiously optimistic" right here.  That’s where I’m at.  Easing back in to some positions. 

Looking at the chart of the Nasdaq, its clear that it has a lot to prove yet.  It’s still got a ways to go just to get to the top of that trading range.  On the positive side, it did bounce around the bottom of the trading range and volume has been increasing to the upside as it surged back above that upward trend line.  If the Nasdaq can break out of this trading range i’ll remove the cautious from my optimistic.

The Dow has been leading the market higher and that is a bit of a concern as traders have been moving to the more defensive blue chips of late.  I want to see smaller, new leaders emerge and lead this market higher.  There has been some of that in telecom and a bit in biotech, but the action seems more speculative rather than breakouts of new leaders.  By the way, where’s the conviction in that move in the Dow?  Each move up off support over the past week has been with at or below average volume.  Technically, the last 2 days could be called accumulation, but you really want to see the moves occur with above average volume.  I think many traders are waiting for that bust out confirmation move with huge volume before jumping in with both feet.  I know I am.

You can see the S&P bouncing off of support of the upward trend line and 50 DMA and breaking out of that "squeeze" I discussed in the last market report.  The S&P looks real good here as volume as picked up in the past 2 days.  Now let’s see if it can hold above this new found support area.