Fed Lowers Rates 1/2%...Dollar Falls...Oil & Gold Rise

DJIA - 74.16, -0.82% SP500 - 10.42, -1.11% NASDAQ Comp. + 7.74, +0.47% Russell 2000 + 8.33, +1.73% Exchange NYSE NASD Advancing 2,216 1,705 Declining 1,224 1,183 Oil $67.50 +$4.77 Gold $754.00 +$13.50 $SOX 225.94 -6.47 Strongest Sectors: XLB +4.11%...XLE +2.21%...XLY +2.05% Weakest Sectors: XLF -6.16%...XLK -3.88...XLU -3.20% Sector Watch Up Trending: Sideways: Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK After the second largest one day DJIA point gain in history on Tuesday, a 10.88% gain, a pullback of 0.82% on Wednesday was a very modest pullback. The SPX gave back a small part of Tuesday’s while both the Nasdaq Composite and RUT rose for the second day in a row. The Fed lowered the Fed Funds rate by ½% that sent stocks gyrating up and down before closing down slightly for the day. In response the dollar fell against other currencies and the price of oil and gold rose. XLF fell 6.16% on Wednesday after rising 15.71% on Tuesday going from Tuesday’s largest sector gain to Wednesday largest sector loss. XLF and XLB rose to their 20 DMA and then pulled back to close below their 20 DMA. The seven other sectors XLP, XLY, XLV, XLI, XLE, XLU and XLK all moved above their 20 DMA only to see sellers push prices lower to close below their 20 DMA. The current price action on these nine sectors may be further technical evidence that the downtrend is in process of shifting from down to sideways. Several leading stocks like AMGN, BA, CB, MMM and TRV have closed above or near their 30 DMA. Remember that stocks are still consolidating between support and resistance and if this is the bottom, as the growing technical evidence since October 10 has been indicating, it could still take anywhere between one and half to five and a half weeks before a clear uptrend reemerges in the broad indices. Which means expect short term moves up and down to continue as the norm…after all that’s what sideways trends do.

Check the charts of our Daily Action Watchlist below for either trend reversal moves or bear flag opportunities.

Index Commentary The DJIA penetrated its 20 DMA and then sold off to close below its 20 DMA…formed a shooting star and bearish harami…watch the S1 level of Tuesday’s large white candle. The SPX moved above and then closed below its 20 DMA…formed a shooting star and bearish harami…watch the S1 support level of Tuesday’s large white candle. The Nasdaq rose to its 20 DMA and closed down from its high and formed a white spinning top. e bottom. The RUT formed a white shooting star as it had the largest percentage gain for the day of the four broad indices. Wednesday’s Action Moving Up: POT, MON, ANR, AGU, CNX, GS, STRA, MOS, BTU, PCLN, AEM, MEE, GDX, BIDU, NIHD, LAMR, FSLR, FMCN, KMT, DRYS, FWLT, SINA, SCHN, IPI, PNRA, NDAQ, LDK, DECK, BUCY, SOHU, AMZN, V Moving Down: ESRX, UAUA, KBE, CLF, BRCM, COH, EBAY Intermediate Term Market Trend: Down Short Term Market Trend: Neutral