After gapping down on the open, stocks drifted lower throughout the morning, but mild buying interest lifted the market off its lows in the afternoon. Still, each of the main stock market indexes posted losses moderate losses. The Nasdaq Composite declined 0.8%, the S&P 500 0.5%, and the Dow Jones Industrial Average 0.3%. Relative weakness in the small-cap arena caused the Russell 2000 to fall 1.0%, while the S&P Midcap 400 slipped 0.8%. All the major indices finished just below the middle of their intraday ranges.

As expected, turnover continued to ease ahead of today's FOMC statement on economic policy. Total volume in the NYSE declined 8%, as volume in the Nasdaq receded 3%. The lighter volume across the board prevented both the S&P and Nasdaq from registering a bearish "distribution day." In the latter half of August, volume was lighter than average due to traders and investors taking their annual summer holidays. Then, throughout the first half of September, market participants seemed to have waited on the sidelines in anticipation of seeing the next move by the Fed. After today, there's a pretty good chance that turnover will at least move back to average levels. The accompanying broad market direction that coincides with the higher turnover will probably determine the overall bias of stocks in the intermediate-term.

Over the past week, many financial websites have talked about nothing except the anticipation of today's upcoming meeting of the Federal Reserve Board. As much as we wanted to avoid doing the same, the reality is that the market is definitely on hold right now. Momentum has dried up substantially in both directions, making it difficult to profitably trade just about anything. This is apparent when either trying to buy breakouts or sell short breakdowns below support. Considering the extremely light volume levels in the market, such lackluster action should not be surprising. The only logical plan of action that won't lead to churning your account is to simply wait and see the market's reaction to the 2:15 pm statement on economic policy.

There is often consensus among economists regarding the anticipated action of Fed meetings, but there is more uncertainty surrounding today's. As such, expect the subsequent market reaction to be even more wild than usual. This volatility will be further compounded by the fact that both the S&P and Dow have been stuck to their pivotal 50-day MAs for the past three days. Considering the circumstances, it's both senseless and pointless to even guess how the market will react today. Rather, we will merely trade what we see, not what we think. We'll take an updated look at the major stock market indexes and leading sectors in tomorrow's commentary. Stay alert and disciplined this afternoon!

Open ETF positions:

Long - SDS, DXD, IBB, LQD
Short - (none, but SDS and DXD are bearish positions)

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and Morpheus Trading Group, a trader education firm launched in 2001 that provides daily technical analysis of the leading ETFs and stocks. For a free trial to the full version of The Wagner Daily or to learn about Wagner's other services, visit MorpheusTrading.com or send an e-mail to deron@morpheustrading.com.