It is tempting to always look for an explanation for why the market happened to do what it did during the day.
Sometimes there is a clear, cause-and-effect relationship, but other times it's random and not driven by anything specific. Tuesday was one of those days in which the action wasn't very meaningful.
Small caps outperformed, while the senior indexes were down. Breadth was positive and there was some interesting action in oil and gas names that bounced off recent lows, but it was just some random movement as bored traders made minor moves as they await the Fed interest-rate decision.
The Fed announcement on Wednesday is going to one of the most significant in a while. It is most likely going to be the first rate cut since 2008. What will be particularly important will be the accompanying policy statement that will provide some hints as to whether more cuts are likely.
This news is not going to be a huge surprise, which is what makes trading the response more difficult. Will investors "sell the news, "or will they celebrate confirmation that the Fed is keeping the spigot of cheap cash on for longer?
We will have more on these issues Wednesday, before the news hits at 2 p.m. ET. All we need to know right now is that the action Tuesday tells us nothing about what might happen next. The negative close in the S&P 500 suggests a positive response, but statistical studies always have exceptions.
Earnings are coming up from Apple (AAPL) later, and that will provide some entertainment, but this market is focused on other issues. Earnings will only have a short-term impact at this point. After the Fed news, we should have some opportunities to focus on individual stocks again, so stay patient.
Have a good evening. I'll see you tomorrow.
Apple is a holding in Jim Cramer's Action Alerts PLUS member club.