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The market has continued to consolidate higher this morning as it searches to test resistance at 1780-82.25. Yesterday's close was 1771.25, the market must hold this level and truly close above the pivot at 1775.75-1776.25 to keep sentiment positive.
Equities began the much anticipated correction in yesterday's session as the S&P reached a low of 1809.50. The market did give traders a head fake early testing the Sunday night session high of 1838.75 with a failed high of 1838.25.
Traders and investors alike should feel confident playing the support and resistance levels, and we are expecting a consolidation. The reality is that we are unlikely to see any big bets to make or break this market ahead of the Fed.
The MAR14 E-mini S&P 500 has hit another downside target/support level overnight of 1760, but then staged a powerful rally all the way to 1785. The market is now up 17 points, and looking to us at least that a bottom has been put in.
The S&P began pulling back from the highs yesterday for two taper related reasons. First the deal in Washington opens the door for a Fed taper next week. Second, the S&P gave a push toward highs early into Tuesday's session and set up a technical failure.
Today's Macro Theme Is "Good News Is Bad News" — Watch Today's Number For Direction: Equities played a game of Pac-Man yesterday and although making it tough to hold a position, the levels continue to work.