The market is in a holding pattern, as it awaits the Fed interest rate decision on Wednesday afternoon. The action was mixed Monday, with a negative bias. Although the Dow Jones industrial average managed a small gain, the Nasdaq and Russell 2000 (IWM) had losses and breadth was negative. Software was particularly weak after Barrons called the sector a "bubble."
Given that the indexes hit new all-time highs on Friday, it isn't too surprising that we are seeing some consolidation at this point. Traders are wondering if a rate cut has already been priced into the market and that a "sell the news" response is likely.
If the indexes pull back at this point, it becomes much more problematic for the bears that are convinced that a major market top may be triggered.
Unfortunately, we will probably have more of this mixed action tomorrow and Wednesday, before the Fed news hits at 2 p.m. ET. It doesn't do much good to guess what the market reaction might be, until we see what the setup is into the news.
In the meanwhile, we have some earnings to provide entertainment. Beyond Meat (BYND) posted better-than-expected revenue, but missed the earnings per share target. The market doesn't care much and the stock is up a couple of dollars as I write -- but just reversed down $20. Don't underestimate the power of a short squeeze in this situation. The big risk for the bulls is an offering, but so far there is no indication that is coming.
Tuesday all eyes will be on the report from Apple (AAPL) after the close. This used to be the most important report in the market, but is now a more company-specific event than a driver of the indexes. With the Fed news the next day, it will have a limited impact.
Have a good evening. I'll see you tomorrow.