Stock Market Analysis

Tuesday, September 21, 2010

Fed Keeps Rate Unchanged... As Expected

The Dow closed sideways today up a meager 7 points in a quiet trading session made volatile by the Fed announcement.

Fundamentals

Like all FOMC announcement days, the trading session was almost flat all way to the release. Even though the Fed did what everyone expected by keeping rates unchanged, investors still cheered the move by rallying into the news before profiting spurred largely by the short term overbought sentiment in the market took over. Investors ran back for the safety of bonds by the end of the session, depressing bond yields across the board (see Bond Yield Curve) in expectation of a short term pullback.

Technicals

It seems like its time at last for the market to take some of its short term overbought condition off so that it could move on higher later on. This can happen in two ways. One, a significant pullback testing the immediate support level and two, a few sideways days before a new high is made. At this stage, it is anyone's guess how that will work out as the Dow is known to do either of the two actions frequently and is also all used to rallying in deep overbought conditions. However, one thing is for sure at this stage and that is the market has made its choice and all dips from now on present a potential entry point until conditions change significantly.

For now, the Dow remains in a short term bull trend, intermediate bull trend within a primary bull trend.
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Chart of Dow Made Using Telechart. Want Your Own Charting Software? Download FREE Now!

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