9:00am (EST)
Although there was volatility on Tuesday, the bulls bounced back in a big way despite the bears best efforts to keep the pressure on. The recent drop of 17% from the market highs in July came in a hurry so naturally any rebound would be strong. However, things weren’t as easy as they looked as the bulls nearly choked.
There was some optimism ahead of the Federal Open Market Committee (FOMC) policy statement but as the market got closer to the announcement, things got hectic.
The Fed said they would keep interest rate at its record low of nearly zero through the middle of 2013. At first, the market held its gains then dropped liked a rock. However, after Wall Street digested the news, word quickly spread that QE3 was back on after the central bank said they had more bullets left in their gun. No specifics were given, yet, but they discussed “the range of policy tools” to help jumpstart the economy.
The Dow soared 430 points, or 4%, to finish at 11,239. We have been listing two levels of support and resistance as of late and both upside and downside targets came into play following the 600-point swing yesterday. Once again our targets were money if you are day trading this market.
The 11,000 level was holding for much of the first half of trading but after the Fed news, the blue-chips fell over 200 points to a low of 10,604 before the final hour rally. Upside targets for the Dow will be 11,350 then 11,500-11,600.
The S&P 500 surged 53 points, 4.7%, to end at 1,172. The index easily cleared our 1,160 target and will face resistance at 1,200 once 1,175 is cleared. A run to 1,225 would be next. The index came with a point of hitting our 1,100 downside target following the Fed news which remains support if the bears can get the index back under 1,125.
The Nasdaq swelled-up for a triple-digit gain of 125 points, or 5.3%, and ended at 2,482. There was a battle at the 2,400 level for much of the session and Tech did fall to a low of 2,331 which was just under our 2,350 target before the rebound off the lows. The bulls will now eye a break above 2,500 to 2,550-2,600 while 2,400-2,350 will be the bears motivation today.
We have a lot to cover in our Members Area this morning as we have added a slew of possible new trades to our Watch List. We will have to be careful in trying to get the best prices but we feel there are plenty of opportunities to make money in the market.
As we head to press, Dow futures are down 174 points to 11,022 while the S&P 500 futures are lower by 17 points to 1,154. The Nasdaq futures are off by 38 points to 2,116.
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