Fed Minutes Bring The Stock Markets Lower...

By: Jack_Steiman

And that's not a bad thing at all. It wasn't a crushing blow lower, but it was a nice, solid move lower as the market used whatever it could in terms of an excuse to sell things off a bit. Mr. Bernanke spoke about keeping rates low basically forever, but some talk of tapering sooner than later, especially through the foreign banks, gave the market an excuse to sell lower.

It needs it so no complaints here as some unwinding would be so helpful to getting folks a little more pessimistic. I, for one, would love to hear that things are about to fall apart, and doom is upon us. It doesn't take long to get folks unhappy about the future, so today was a nice start but now we have to see if those Fed minutes are just a quick non-event, or whether the news from the Fed will start at least a reasonable selling episode for a while to calm things down from a sentiment perspective.

The market, as usual, was grinding its way a bit higher before the selling finally kicked in. It wasn't blasting off, but there were a few sellers starting to quietly come in roughly thirty minutes before the report from the Fed came out. Nothing major, but some folks started their selling ahead of the Fed, since they believed, and probably rightly so, that a lot of good Fed news was already baked in. If he had said everything perfect for the market it's hard to imagine we would have lasted higher, but we'll never know the answer to that now, will we.

It's good to see some selling, but the selling stopped basically at the first important, but not critical, support level of 1775. The bears are still not able to get things rocking lower, but at least the minutes gave the first excuse in a while to sell some off the top. Maybe the bears can build on it, but we'll see if the market can get a strong gap lower tomorrow to set some real selling in to motion. We'll know soon enough. Thus far, the bears have been unable to get it done. Now they have their best chance, but let's see it before reacting to it. The onus is on the bears to make a change in the short term trend.

1775 is first up for the bears. If they can remove the breakout level that 1775 represents then they can start focusing on some exponential moving-average prices, such as 1768, which is the 20-day. 1750 is trend-line support, followed by strong-gap support at 1737, and finally, the horizontal-key level at 1730. Bigger picture, only if we take out 1730 can we expect a much stronger-selling episode. That would tell us sentiment is kicking in harder. For now, keep things very light on either side of your playing as shorting won't be easy either.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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