Daily Market Commentary: Holds Station

Markets had reacted positively to Fed news to continue with their easing policy with the expectation of a rate hike in December 2011. However, early enthusiasm gave way to late afternoon selling which leaves markets vulnerable to some follow through downside on Wednesday.

The S&P closed down slightly but remained in the upper part of yesterday's trading range


via StockCharts.com

Small Caps tagged resistance but nothing more


via StockCharts.com

Just as the semiconductor index brushed its 50-day MA:


via StockCharts.com

Likely opening weakness (a gap down) sets up the possibility for a whole day of selling. Should this happen bulls probably have an hour in the morning to stabilize things but it could be hard for them to build momentum even if this is managed. Todays' trading was too wide for a swing trade tomorrow - an inside day would offer a better opportunity. I suspect tomorrow will see an absence of buyers rather than any concerted sell off, but it will be enough to offer a lower close.

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