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Choppy Trading On "Fed Day"

|Includes: BAC, BB, BlackRock, Inc. (BLK), GS, JPM, WFC

As expected, the Fed left the interest rates unchanged.  The market stayed strong most of the day, with a push to its day high immediately after the fed announcements.  But, the rally soon faded and the market sold off into the close.

This morning, BLK received an upgrade to "Buy" with a $230 price target.  I started talking about BLK showing a breakout pattern last week in our Trading Room.  Just yesterday, I added:

September 22, 2009 9:29 AM
above $208!! this can run to $220.

Last week, I bought the BLK October 210 calls at $6.2.  This morning, I sold them at $11 for a +77% gain:

These BLK October 210 calls traded as high as $12.8 and closed at $8.  BLK's high of the day was $220.17!!  After cashing out on BLK, I started to raise cash, as I commented in the Trading Room:

September 23, 2009 7:42 AM
seems very nervous ahead of the Fed today...

September 23, 2009 8:13 AM
is shaky... I'm starting to raise cash and decrease the number of my positions...

Just before the Fed released its meeting results, I added:

September 23, 2009 10:56 AM
the thing that I'm cautious about is that the indices look a bit toppy on the daily charts...

Sure enough, the rally simply could not hold, and sold off into the close.  To me, the charts were just a little too congested on the top today to push higher.  I imagine a lot of "talking heads" have been on TV today giving elaborate "reasons" for why the market did not push higher.  I also imagine that there will be many articles written with elaborate rhetoric to give the "so-called" reasons as to what happened today.  But, most of them are simply "rhetoric" and nothing more.  Listening to too much of that can actually make you more confused.  There are a lot of valuable information out there; and, there are a lot of people who really do know what's going on.  But, there are a lot more that are simply noises.  You just have to learn to determine who to listen to and what works for you.  If you're trading actively, technical analysis is certainly indispensable.  What's more, charts can keep you honest and more objective.  They can also help you to filter out the "subjective" noises that you may come across.  Once you have identified a good trade signal on the charts, then, perhaps you can do some research and find the fundamentals to support your trading thesis.

When the market started to turn today, the financials turned hard.  GS and BAC, which were both green for the most of the day, closed in the red.  WFC and JPM, which were strong yesterday, basically gave back those gains.  The Dow finished down 81.32 points; SPX fell 10.79 points; Nasdaq lost 14.88 points:

Commodity sectors were weak right from the open today: XME (metals and mining) -2.75%; GDX (gold miners) -3.07%; XLE (energy) -2.09%.  USO (oil) lost 5%!!  Both SLV (silver) and GLD (gold) closed in the red.  SOXX (semiconductors) managed to hold on to a slight gain.  FXI (Chinese ADRs) lost 1.9%. 


SPX fell 10.79 points to close at 1060.87.  It managed to stay just above its 10-day MA.  The MACD was slightly lower.


Nasdaq dropped 14.88 points to close at 2131.42.  It also stayed above its 10-day MA.  Its MACD slipped.

Crude fell below $70/barrel and gold also slid.  We have been talking a lot about the importance of the commodity sectors for this market.  Today, the commodity sectors had no strength.  That fact alone should have given investors/traders reasons to be cautious.  VIX sank below 23 (a level that we've been constantly discussing) today, but, bounced up to close above once again.  However, both SPX and Nasdaq stayed above their 10-day MAs, and, above the support levels that I pointed out in my Market Forecast for this week.  In my Market Forecast, I said, "For the new week, we might see some sideways trading to start the week."  Its Wednesday, and, the market is not too far away from where it closed last Friday.

Now, the next 2 days could make the difference.  RIMM is reporting tomorrow after the market and can provide the extra impetus that the market needs to go higher.  The daily charts on the indices are still toppy, but, today's negative close helped them to let of some steam.  The pullback that the commodity sectors experienced today also created more breathing room.  So, we'll see if they can lure the buyers back tomorrow.

Good night and HappyTrading! ™

Disclosure: RIMM (long)