After the close we saw some earnings reports take some stocks lower. Federal Express, Bed Bath and Beyond, and Adobe were down 2%, 12%, and 3% respectively in after hours trading, and that sent the S&P 500 futures down a bit, but enough to erase Tuesday's small gains in the S&P.
The Fed's two day FOMC meeting concludes this afternoon and we should expect the policy statement to released after 2:00 ET. They are supposed to announce the start of the unwinding of the $4.5 trillion dollar QE. It should be a market mover, I suppose, but the market just doesn't seem to react to the normal catalysts like it used to. Is that because program trading is taking the emotion out of the market? I'm not sure, but something seems to have changed.
Puerto Rico is bracing for Hurricane Maria and it has been upgraded to a category 5 storm. But gains, does the market care? It seems like as long as a potential tax cut is on the table, the market is willing to shrug off most bad news.
The SPY (S&P 500 / C-fund) was up slightly and it basically ignored the reversal pattern we talked about yesterday, but it did not make a higher high for the first time in 7 trading days so it did stall a bit despite the small gain. It is a lot closer to the top of its longer-term rising channel than the bottom so the upside potential may be more risky than the chances of a move to the downside. But we're in a bull market in a rising trend so betting on the downside would be swimming against the current.
The DWCPF (small caps / S-fund) stalled at its double top and a little pullback from here seems reasonable, unless the Fed can do something to trigger a rally today above resistance.
The Dow Transportation Index was down slightly on the day as it has been stuck in that 9450 - 9550 area for several days. Perhaps that is a bull flag getting ready to breakout? Either that or, as we've talked about, it could be a flat top that precedes a pullback. Bull flags tend to work better when they are sloping slightly downward, so the flat top is a good possibility.
The EAFE Index (I-fund) was up nicely on the day and again the dollar is doing a lot of the work.
The High Yield Corporate Bond Fund HYG made a new high yesterday, and that's usually a good sign for stocks, as if they needed more help.
The AGG (Bonds / F-fund) has struggled since breaking below the rising channel and the 20-day EMA. The 50-day EMA is there as a possible cushion, but is the trend changing?
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