Good morning! The volume remained light as anticipated heading into Wednesday's FOMC announcement. We also saw a continuation of the recent trend towards morning selling ahead of the Fed as opposed to the prior bias towards morning upside. The began out of the open with a slight gap down in the Dow Jones Industrial Average, S&P 500, and particularly the Nasdaq Composite. From that point on the indices split. The Dow continued to show a great deal of relative strength, quickly breaking to new yearly highs, while the Nasdaq was unable to even lift its head.

The Nasdaq based throughout the early morning until hitting its 5 minute 20 sma resistance at the 10:45 ET reversal period. The S&P 500 had a slow ascent at this time, but stalled when coming up on its 5 minute 200 simple moving average and the closure of its gap. All three indices held the reversal period very well and began to pull lower into 11:00 ET. The Nasdaq dropped quickly, but the move was short-lived. The 11:00 reversal period held, as did the morning lows on the S&P.

Volume continued to decline again over noon as the range narrowed. The S&P 500 became wedged between its 5 minute 200 sma and morning lows, the Dow began to hug its 15 minute 20 sma support, and the Nasdaq fell sideways along its 15 minute 20 sma. Another wave of selling hit as the Nasdaq ran into its 15 minute 20 sma resistance at 13:00 ET. This is a typical afternoon breakout zone both in terms of the time of day and the resistance level hit. Wariness ahead of the Fed held off potential buyers, allowing the Dow to return to morning lows while the S&P 500 and Nasdaq made new ones.

The news from the Fed was not unexpected. They once again hiked rates by 25 basis points to 5.0%, making it the 16th consecutive increase. The next meeting comes on June 28th-29th and there is a great deal of debate as to whether or not Wednesday's move will end the cycle.

We saw sets of three waves following the announcement. The first was on the one minute time frame with an initial breakdown, near immediate pop (notice how it was stronger than the initial reaction), which was then followed by a third downside move... all in 15 minutes. The next was the larger wave of three with the initial chop serving as a downside move, followed by yet another stronger counter-move, and a third reversal around 15:00 to head lower once more. All in all, these were pretty normal reactionary moves.

Without sharp follow-through on Wednesday, the market remains in a fairly solid range overall, despite new Dow highs. This leaves me without a strong bias for daily action on Thursday, although overall I am seeing more weakness than the other way around as I flip through many of the sectors. It is more of a daytrade bias, however, so I will continue to focus primarily on intraday action at this time.

Economic Reports and Events
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
May 15: -
May 16: Building Permits, Core PPI, Housing Starts, and PPI for April (8:30 am), Capacity Utilization and Industrial Production for April (9:15 am)
May 17: Core CPI and CPI for April (8:30 am), Crude Inventories 5/12 (10:30 am(
May 18: Initial Claims 5/13 (8:30 am), Leading Indicators for April (10:00 am), Philadelphia Fed for May (12:00 pm)
May 19: -

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 11: AEM (A), BGO (A), DT (?), EXPE (A), JCP (?), KSS (?), PBY (A), UBB (?), URBN (06:00 am ET)
May 12: DRS (B), PBR (?)
May 15: A (A), GG (A), PRGX (?), TGT (?), VAL (?)
May 16: ANF (A), AEOS (B), AMAT (?), CPWR (A), DE (B), HPQ (?), HD (B), JTXX (A), NTES (A), PLAB (A), REDF (B), SKS (8:00 am), APLA (B), WMT (B)
May 17: ACXM (?), BEAS (?), FL (?). GYMB (?), HOTT (?), INTU (A), MW (A), PETM (A), ROST (B), CRM (?), SNDA (A), SNPS (A), V (?), ZLC (B)
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.