9:00am (EST)

The Fed did this, Bernanke said that but in the end it wasn’t enough to keep the rally going. 

We had a good feeling Fed Chairman Ben Bernanke would let Wall Street down by not doing more or announcing a bigger commitment to the Operation Twist program which got extended yesterday.  The best question that someone asked Bernanke was why the Fed wasn’t doing more if they say they have additional tools or why there wasn’t a bigger commitment that could have included mortgage-backed securities.

Bernanke was firm on his stance but didn’t offer what additional tools the Fed has.  The Fed took the easy way out and the market wanted more.

The bears saw an opportunity to strike and the Fib heads (Fibonacci traders) were happy as the 61.8 retracement stuck like glue. We talked about this yesterday inside our Members Area and the bears also held the 100-day MA’s.  These two technical indicators are perhaps the last line of defense the bears have before a trend change takes place.

The Dow dropped a baker’s dozen, or 0.1%, to close at 12,824.  The blue-chips traded to a high of 12,877 but tested a low of 12,744 before ending above the 12,800 level.  We should see a run past 13,000 or a drop below 12,600 by next week (or sooner) depending on how things play out.

The S&P 500 slipped 2 points, or 0.2%, to finish at 1,355.  The high was 1,361 which was well short of resistance at 1,375 while the low came in at 1,346.  We could see 1,400 or 1,300 by the end of the month which is roughly a 4% move from current levels. 

The Nasdaq actually added a point to close at 2,930.  Tech traded to a peak of 2,942 as the 2,950 held while the low was 2,910.  The bulls are still trying to make a run to 3,000 while the bears are looking to get the action back below 2,850.

Futures are showing a mixed start at the open and look like this:  Dow (+10); S&P 500 (+1); Nasdaq 100 (-1).