A strong start and strength in biotechnology due to Sarepta (SRPT) helped today, but there just wasn't enough buying interest to hold things up into the close. The early strength seemed to be due to routine optimism that no rate hike would be announced on Wednesday, but some concerns are starting to pop up that maybe the policy statement will have a hawkish tone and set us up for a hike at the next meeting in December.
Overall, breadth was quite good, but weakness in big-cap names including Apple (AAPL) , Microsoft (MSFT) , General Electric (GE) and Intel (INTC) kept the indices around flat. There was some strength in optical stocks and biotechnology, but small-cap speculation slowed down. (Apple and General Electric are part of TheStreet's Action Alerts PLUS portfolio.)
Unfortunately, market players have another day and a half to contemplate whether the Fed announcement is going to be a game changer or not. It is well anticipated at this point that there won't be a hike but that doesn't mean we are going to have a wild celebration of extended dovishness.
Technically, the indices continue to hold support, but the overall bias is negative. We broke support Sept. 9 and have not yet managed to regain upside momentum, although we have held up well. The danger of taking out the recent lows is still quite high.
I did quite a bit of selling today as I expect stocks to drift as we await the Fed. It felt right to lock in some gains and wait for further developments before pushing once again. Stocks still haven't done much wrong but the upside progress is slowing.
Market players should do some positioning in front of the Fed, but there are signs of caution that will likely keep things contained. Expect slow action until Wednesday afternoon.
Have a good evening. I'll see you in the morning.