Good morning! Tuesday was another light volume day for the market as many participants continued to be hesitant going into tomorrow's FOMC announcement. The light volume helped perpetuate the divergence between the major market indices as a profit warning from Dell weighed heavily on the tech sector, leading to a show of relative weakness as compared to the S&P 500 and particularly the Dow. Gold stocks, oil services, energy, utilities and the airlines contributed to the strength. All posted gains on the day. The greatest assistance for the Dow Jones Industrial Average came from General Motors, however, after Deutsche Bank upgraded it to hold from sell. Semiconductors, biotechs, and homebuilders did not fair as well.

The day began with a downside gap in the Nasdaq Composite and S&P 500 and a slight upside one in the Dow. Congestion then followed as volume dropped off heading into the 11:00 ET reversal period. At that point the market saw a push higher. The Nasdaq surged, filling its gap but then halting abruptly at that resistance level.

The Nasdaq and S&P 500 both fell back to morning lows heading into the afternoon. The Nasdaq took the fastest south-bound turn, coming into support at 13:00 ET, while the S&P 500 took until 14:00 ET to reach that zone. While the Dow also corrected at this time, it was a slow reversal and the index held the upper third of the day's range. It also came into support at the 14:00 ET reversal period, but in it's case that support was the 15 minute 20 simple moving average.

The volume remained very light for the remainder of the day, but some rounding off at lows allowed the indices to pull up a bit ahead of the close. The Dow even managed yet another new high on the day. "Rounding lows" refers to when an index makes lower lows to a lesser degree than the prior one and is an indication that the sellers are waning. Often the index will start to hug an upper resistance level, like the Nasdaq did along the 5 minute 20 sma, before then breaking higher.

While the general consensus is for another rate hike by the Fed tomorrow, there is a lot more uncertainty with this meeting than most of those over the last year or so. Even if the rate is raised once more, eyes will be towards the accompanying statement and what insight it may hold to upcoming rate levels. The typical reaction to a Fed announcement is a three wave follow through. The first will be swift, followed by a counter-move (which may be stronger than the initial reaction), then a third move back in the initial reactionary direction. Use a lot more caution throughout the session.

Economic Reports and Events
May 10: Crude Inventories 05/05 (10:30 am), FOMC policy statement (14:15 pm)
May 11: Business Inventories for Mar (8:30 am), Initial Claims 05/06 (8:30 am), Retail Sales for Apr (8:30 am), Retail Sales ex-auto for Apr (8:30 am)
May 12: Export Prices ex-ag. for Apr (8:30 am), Import Prices ex-oil for Apr (8:30 am), Trade Balance for Mar (8:30 am), Mich. Sentiment-Prel. for May (9:50 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
May 10: WEL (?), RIO (?), DCEL (?), DQE (B), ENER (?), HJT (B), GSS (A), IVAN (?), MIR (?), MT (?)
May 11: AEM (A), BGO (A), DT (?), EXPE (A), JCP (?), KSS (?), PBY (A), UBB (?), URBN (06:00 am ET)
May 12: DRS (B), PBR (?)
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.

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.