Fade the Fed.

Typically the market retraces any gains or losses that it incurs in the hours following a Fed interest rate decision.  Yesterday was a bit interesting in that most of the gains came before the Fed announcement to raise rates 1/4 point.  Investors are usually more timid before the announcement and react more strongly one way or the other afterward.

On Tuesday the early morning strength held right up to the announcement, then there was a sharp spike up immediately following the rate hike.  Then we saw a sell off for an hour and the market closed with one last rally.

             

So technically the S&P 500 was up from the moment before the announcement when compared to the closing price.  But it closed no higher than the high made before the announcement.

Does it matter?  Maybe not.  But the tendency is for the market to fade the initial reaction in the days following decision day.  Something to keep in mind.

So where are we now?  After a few days of selling off followed by a one day bounce, the S&P 500 is somewhere between long and short term resistance (point A) and long and short term support (B and C).


                       Chart provided courtesy of www.decisionpoint.com

The shorter term indicators do show we are oversold but that can be erased by a day or two of flat to up action.  Based on the intermediate term indicators, my money is betting on the downside although the bulls are still confident that this is a small pullback ready to be bought.  The bulls and bears are battling it out... and you have ringside seats. 

In our weekly sentiment survey, the bears came out of hibernation virtually reversing last week's results...

                          Votes       Ratio
Bullish (up)           45           26%  (down from 56% last week)
Bearish (down)    100           58%  (up from 29% last week)
Neutral                 27           16%

That's all for today.  Currently 100% G fund.  Thanks for reading.