Stock indexes sell off on Fed’s unchanged outlook

Congestion Rules

Last week in my column I focused a great deal upon intraday price action and the larger daily resistance that was hitting. As discussed, the slightly higher highs we were experiencing on the 30-minute time frame created a series of bull traps, which easily gave way to more rapid bursts of selling intraday. This price action also factored into Tuesday's post-Fed move. Despite the morning gap on Tuesday morning, the indices were striking upside resistance within a 30-minute triangle that had formed as a result of the rapid downside flushes and slower upside within the last wave of the triangle heading into Tuesday morning added another pro to a breakdown bias. This created a two-wave sell pattern on this larger intraday time frame with the first wave up on the 9th and second wave up beginning mid-day on Monday.

S&P 500 (Figure 2)

Tuesday's Index Wrap-up

The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a loss of 66.45 points, or 0.55%, and closed at 11,954.94. Seven of the Dow's thirty index components posted a gain on Tuesday. The top performers were Pfizer (PFE) (+1.81%), Microsoft (MSFT) (+0.98%), and Procter & Gamble (PG) (+0.65%). The weakest were Alcoa (AA) (-3.32%), Caterpillar (CAT) (-2.42%), and Bank of America (BAC) (-2.39%).

The S&P 500 ($SPX) finished the session with a loss of 10.74 points, or 0.87%, and closed at 1,258.47. The strongest sector on Tuesday was the utilities, while the strongest individual percentage performers in the index Urban Outfitter (URBN) (+5.33%), Netapp (NTAP) (+2.13%), and MetroPCS Communication (PCS) (+1.91%). The weakest sectors were consumer discretionary (-2%), materials (-1.7%), and the financials, (-1.5%), while the weakest individual performers were Best Buy (BBY) (-15.46%), Harman Intl. Inds. (HAR) (-7.26%), and MEMC Electronic Materials (WFR) (-7.06%).

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