The day started out up, as futures were higher before the opening, but the rally didn't last long. We got right to resistance on the S&P 500 and NDX and came down and tested support and held, meandering sideways for a couple hours. Just before the Fed announcement, the market rallied right to the morning highs on the NDX, but fell on the S&P and Dow.

After the Fed announced its concern about inflation, it spooked the market and the indices sold off sharply, then snapped back to test resistance, but failed miserably and plunged.  The indices took out the earlier decline lows, closing at the lows for the day going away.

On the day the Dow was down about 100, the S&P was down 8 1/2, Nasdaq 100 was down 10 1/2, and the SOX Semiconductor Index was down about 2.30 after being up about 4 earlier in the day. It was a complete reversal, and that dragged Nasdaq down.

Despite the negative day, advance-declines in New York were not bad at all: only negative by about 220 issues, about 17 to 15.  However, up/down volume was 2 to 1 negative with 1.6 billion traded.  On Nasdaq, advance-declines were just 17 to 13 negative.  Up/down volume was about 2 1/2 to 1 negative on total volume of about 1.6 billion.

TheTechTrader.com board was mostly narrowly mixed. On the downside, Forward industries (FORD) got hammered back down to 16, down $1.24, Dynamic Materials (BOOM) gave up 93 cents, CryptoLogic (CRYP) down 80 cents, Daystar Technologies (DSTI) down 81 cents, and Millennium Pharmaceuticals (MLNM) down 53 cents.

On the plus side, Alvarion (ALVR) hit a six-month high, closed at $11.62, up 45 cents. Other stocks were mostly fractionally higher. Travelzoo (TZOO) gained 45 cents and Vertex Pharmaceuticals (VRTX) was up 33 cents.

Reviewing the overall patterns on the hourly charts, the indices punched through a couple layers of support, but are close to retesting Monday's lows and may do that early tomorrow morning. We'll soon see if they hold or not.

Good trading!

Harry Boxer is a technical consultant to many Wall Street hedge funds and large institutional traders, and author of TheTechTrader.com, a real-time diary of his day, swing and intermediate-term trades. For more of Harry Boxer, sign up for a FREE 15-day trial to his Real-Time Technical Trading Diary, or sign up for a Free 30-Day Trial to his Top Charts of the Week service.