Despite a sloppy day of action for the stock market, breadth was just slightly negative and there were sufficient pockets of strength to prevent negative sentiment from taking hold. There was also relative strength in FAANG names and highly selective stock-picking was working again.
It is likely that some market players held off on making major moves in front of Wednesday's FOMC interest-rate announcement. A rate hike is expected but bonds were weak again and seem to be indicating an expectation that the Fed may ramp up its hawkishness. Bonds are at a very important technical juncture right now and if they break some key support levels it is likely to have some repercussions for equities.
Keep in mind that the end of the third quarter is coming up Friday and we are also currently in the weakest week of the year seasonally. These two issues are a product of positioning more than fundamentals and the Fed news Wednesday is going to have a further impact on this issue.
Overall, the market remains healthy although there are negatives if you prefer to take a glass-is-half-empty approach. My view is that individual stocks are working well and accounts are at all-time highs so stick with what is working until it stops working.
Hopefully we have a bit of volatility on the Fed news Wednesday to shake things up and create more opportunities. Some more downside would not be a bad thing from a trading standpoint.
Have a good evening. I'll see you tomorrow.