Good morning! The new week kicked off on a slower note with volume declining ahead of Tuesday's Fed meeting. A range developed fairly early on out of Monday's open. After a bit of a gap up that took the S&P500 and Dow Jones Ind. Ave. into price resistance from the prior afternoon, the market began to pull back. The 5 minute 20 sma support hit just after 10:00 ET and the market climbed gradually off it, changing the intraday pace to begin to favor the bears.

The slow upside continued to turn over until finally, after volume declined significantly, the bulls gave in and the selling pressure hit full blast. This took place coming out of the 12:00 ET reversal period and the selloff continued at a rapid clip over the next hour. The decline waned only as the 13:00 ET reversal period hit and the S&P500 and Dow came into the prior day's lows. The 5 minute 200 sma and gap closure in the NASDAQ provided additional support.

The market didn't really have a great deal of volume on the mid-day selloff. The pace of the move, while strong, was not as sharp as last Thursday's move either. This is typical action for a trading range. The correction from the support that hit around 13:00 didn't have a lot to motivate it. We did see a stronger turnover in the SP500, which formed a 2B reversal on the 5 minute charts. This was followed by a 5 minute continuation pattern out of 14:30 ET.

While the upside surges were strong within the late day rally, the overall pace of the move off lows was simply average. The market continued to move on slower volume. A lot of this is probably due to Tuesday's Fed meeting and the afternoon announcement. Part of it, however, is just because the market has been in a range for a few weeks and it's normal for volume to decline throughout a range. We should see it pick up as the market attempts a breakout on the daily charts. At the moment there isn't a strong bias to suggest that is going to happen before the holidays are over.

A typical Fed day begins with some upside into the morning. Then things tend to slow down a great deal over lunch. Traders need to be very cautious during this time. Once the  2:15 ET announcement is made, things get a little crazy. Volume pours into the market with the initial reaction. A secondary correction following the first surge can be stronger than that first move, but a third will generally follow it. This takes the market back into the initial reactionary direction. Continue to use added caution during this time because trading will be more volatile. Lately it has been more subdued than in recent years, but it can still be dangerous if your execution skills are unpolished.

Updates from yesterday remain unchanged: NCI and PWAV from last Wednesday's column are performing nicely. RAVN also remains of interest as a buy this week, but will have added risk due to its light volume. NTRS, which I have from mid-October as a position trade buy is now breaking out again to highs. The 20 week sma and 100 day sma are support. HSP, a position trade from early September, is currently basing again and also has support at its 20 week sma zone.

Economic Reports and Events
Dec 13: Retail Sales for Nov. (8:30 am), Retail sales ex-auto for Nov. (8:30 am), Business Inventories for Oct. (10:00 am), FOMC policy announcement (2:15 pm)
Dec 14: Export Prices ex-ag. for Nov. (8:30 am), Import prices ex-oil for Nov. (8:30 am), Trade Balance for Oct. (8:30 am), Crude Inventories 12/09 (10:30 am)
Dec 15: Core CPI for Nov. (8:30 am), CPI for Nov. (8:30 am), Initial Claims 12/10 (8:30 am), NY Empire State Index for Dec (8:30 am), Net Foreign Purchases (9:00 am), Capacity Utilization for Nov. (9:15 am), Industrial Production for Nov. (9:15 am), Philadelphia Fed for Dec (12:00 pm)
Dec 16: Current Account for Q3 (8:30 am)

Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stock's earnings date before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
Dec. 13: ADCT (A), BBY (?), MATK (A)
Dec 14: IES (A), WGO (B)
Dec 15: ADBE (A), APOL (B), BSC (?), GS (B), KBH (A), LEN (?), ORCL (A), PIR (?), ZQK (?)
Dec 16: GTK (B)

Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.