The Fed raised.  The market fell.  Now what?

The Fed raised rates for an 11th straight time yesterday.  Since many had thought, or at least hoped, that the Fed may not raise because of recent current events, the market did not react well and we saw some damage done to the indices.  It wasn't so much that the interest rates were raised that spooked the market, but that The Fed gave no indication that they will be stopping any time soon. 

A second day of steep losses have put many of the shorter term indicators into oversold territory.  We are also seeing more pessimism as any hopes of catalyst for a market rally are diminishing after the rate hike.  That type of sentiment can lead to a little bounce.  As I mentioned yesterday the action following an interest rate announcement tends to reverse itself the following day and/or week.  The S&P 500 was up the following day and week 18 of the past 23 times when the market ended down the day of an announcement.

Is this a "It's different this time" situation?  I don't know but let's remember what time of year it is.  The last couple of weeks in September are the worst two weeks, of the worst month of the year.  Today is the 14th trading day in September.  Only one day of the eight remaining had a positive average return during this period from 1950 to 2003.


                             Chart provided courtesy of www.sentimentrader.com

After Monday's $4 a barrel rise, oil pulled back over $1 Tuesday.  Certainly not enough to excite the market.

The S&P 500 is directly in the middle of what appears to be a rising wedge formation.  I would really like to see it fall to somewhere between the 200-day moving average and the rising lower trend line.  That should provide solid support and also put enough fear into the herd to put in a bottom. 


                            Chart provided courtesy of www.decisionpoint.com

What I want to happen and what will happen don't collide very often.  I will just keep watching the intermediate term indicators for any changes. 

As for the short term it may be worth a play.  As I mentioned, some of the short term indicators are flashing green.  The odd lot traders are getting extremely bearish again.  That usually happens near a bottom.  I will watch the action in the morning and see if there is a high odds opportunity take make some money in stocks.  If the morning is down big again, which would actually surprise me, I may put some money into stocks funds.  Stay tuned.  If I make a move I will send out the email alert and post the transaction on the message board in this forum.

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