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Recent Volatility Leads Traders Down Under


Even risk-averse currency traders can long the iShares MSCI Australia Index Fund.

Summary of Yesterday's Notable Technical Developments

Stocks were mixed Wednesday as those traders and investors who are still around seemed to take a step back to digest the FOMC's statement on rates. Stocks traded higher from the start of the session and then trended lower throughout the day. But mediocre volume prevents us from drawing any real conclusions from the price action.

Bonds followed the same pattern as stocks, with selling accelerating after the Fed announcement. The 10-year Treasury yield closed above 3.58% for a second day.

Commodities were firmly higher despite the late-day rally by the dollar (make a note of that); the oil pit responded bullishly to inventory data out yesterday morning, enabling crude to close above short-term resistance; gold rallied right along with oil for the day, but was unable to overtake its short-term resistance.

The US Dollar Index
traded lower for most of the session Wednesday, but rallied after the 2:15 statement to end nearly unchanged.

Overnight and early morning: Asian markets were mostly lower overnight while European markets are down across the board so far this morning. S&P futures are indicating a lower open for US equities (as of 8 a.m. EST). The US Dollar Index is trading higher by over 1% early this morning. Oil and gold are both trading sharply lower this morning in reaction to the higher greenback.

Earnings: FedEx (FDX) -- although their pre-announcement should already be baked in the price; Research in Motion (RIMM); Oracle (ORCL); and Nike (NKE).

Market internals:
(Figures are rounded)

Critical Market Components:

S&P 500: support for the S&P is at its ascending 75-day moving average (currently at 1072.54); the next meaningful resistance is 1139 which is a convergence of Fibonacci levels; seems as if the market is content to end the year around current levels -- nobody wants to make any waves.

NASDAQ: the critical level on a weekly closing basis is 2211.95; support below that is the lower edge of a rising wedge that has developed at 2188; next resistance on a confirmed breakout is 2231.02 -- a 61.8% retracement of the 2008-09 bear market; NASDAQ and semis are market leaders right now.

Dow Jones Industrials: support at rising trend line at around 10,300; resistance for the Dow on a weekly closing basis is 10,507.59; 9,712 is next target on the downside on any break of support; the Dow was lifted by energy and tech Wednesday.

10-Year US Treasury Yield: no changes here; horizontal line support remains at 3.554%; resistance remains in the 3.78% to 3.88% range -- the wave iii of 5 yield projection.

Commodity ETF (DBC): support at the 80-day moving average at 23.30; substantial resistance at 25; commodities again marched to the beat of their own drum Wednesday as the complex rallied and held onto its gain despite afternoon strength in the dollar.

US Dollar Index (DXY): short-term support at previous resistance of 76.58; next short-term target is the October high of 77.47; the intermediate-term target is the 80 to 81 area; the DXY traded lower early in yesterday's session and then rallied back up to near breakeven by the end of the day -- still very bullish action.

Semiconductor Index (SOX): recaptured the 339 level for a day; that level will be key going into the weekend; support at the weekly uptrend line at around 320; a breakout above the 339 weekly resistance would lead to an upside target of 379 to 385.
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No positions in stocks mentioned.

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