Oversold Consolidation

When the market gets stretched on the downside, it has two basic choices - 1) it snaps back or 2) it consolidates.

Today we saw the latter.

From the get go, relative underperformance by the Nasdaq 100 & Russell 2000 indicated this morning's bounce attempt was on shaky ground and we spent the rest of the chopping around and closed in the middle of the intraday range. In fact, on an intraday basis, the S&P rallied right back to its 50 day moving average (S&P 1052) but failed to take it out. Making matters worse was the inability for the market to hold its rally following this morning's batch of better than expected economic and earnings data. While it isn't unusual to see some choppy activity before the Fed, the conditions are such that we should be seeing buying interest return in size and that's not happening yet.

Bottom line - another day of unimpressive action given the current oversold condition. Trading in the dollar remains a controlling factor ahead of the Fed.