S&P 500 Recap and A Look Inside the Markets

The FOMC release this yesterday basically reaffirmed what most of the market has been thinking for some time now, namely, that the economic "recovery" is proceeding at a moderate pace though "somewhat more slowly" than had previously been expected. 

They plan will be keeping interest rates near zero for the next few months, or in their words, "an extended period of time". They repeated that the QE2 program would come to an end this month but at this point they had no intention of actually reducing their balance sheet or selling any of the $600 billion in Treasuries which they have purchased over the last 6 months or so. What they will do however is to reinvest the proceeds from maturing Treasury bonds. That will give some stimulus but compared to the massive sum of $600 billion, amounts to a drop of water into the bucket. This news sent the markets lower.

Wednesday'session opened without a significant gap but quickly moved four points lower and put on the chart what held as the low of the day until very late in the session. The SPX then quickly began to move higher and put the high of the day on the chart just before 11:00 am. The next several hours were choppy with a slight negative bias until Fed Chairman Bernanke began his press conference. The market obvious disliked what he had to say and the last ninety minutes saw the index shed almost twelve points, closing at the lows of the session.

For the SPX Index there were 96 components advancing and 378 components declining. On the NYSE 3,156 issues were traded with 1,269 advancing issues and 1,788 retreating issues, a ratio of 1.41 to one declining. There were 67 new highs and 23 new lows. The five day moving average of New Highs is 42 while the five day moving average of New Lows is 46 and the ten day moving average of Net Advancing is 174.

Wednesday’s volume was about equal to Tuesday but still failed to exceed the ten day average. Volume was greatest on the intraday up moves but also surged as the session closed with a thud. Our Breadth Indicators look quite mixed suggesting some choppiness ahead. The McClellan Oscillator ten day average remains oversold.

83.6% of the SPX are above their five day moving average, 74.8% are above their 10 day average, 41.2% are above their 20 day moving average, 27.4% are above their 50 day moving average, and 58.8% are above their 200 day moving average.