Trading on Fed Day is always a challenge. The action in front of the news is usually slow and random, and after the announcement there is usually a few whipsaws before things settle down.
So far this morning, we are seeing a few stocks bounce back after some poor action yesterday. Breadth is much better, at close to 3 to 1 positive but the level of new 12-month highs is low at around 140.
Biotechnology names suffered the most yesterday and that group is bouncing back, but some technical damage has been done and I expect that there are trapped bulls looking to escape.
The optical sector is also seeing some bounce, but that sector has really been poor lately and it is probably not going to see a V-shaped recovery. I'm eyeing Oclaro (OCLR) in the group again, but am in no hurry to build a position.
There is still some speculative action in biotechnology that I'm day-trading, such as Cerulean Pharm (CERU) and BioScrip (BIOS) , but it is limited. Recent Stock of the Week Builders FirstSource (BLDR) continues to develop well, but could use better volume.
There isn't much to do but some small, fast trades until we have the Fed news out of the way. Overall the market setup is not very positive, but betting on a negative reaction to the Fed has typically not worked very well.