Second verse, same as the first! That's the best way to describe yesterday's broad market action, as the major indices again drifted sideways in a tight holding pattern ahead of today's FOMC announcement on interest rates. The S&P 500 lost 0.1%, while the Nasdaq Composite edged 0.1% higher. The Dow Jones Industrial Average fell 0.3%, but both the small-cap Russell 2000 and S&P Midcap 400 indices were unchanged. Overall, yesterday was a rather lethargic session that saw the S&P 500 oscillate in a trading range of less than five points.

As we often see ahead of Fed announcements, turnover declined in both exchanges. Total volume in the NYSE declined by 12%, while volume in the Nasdaq was 1% lower than the previous day's level. It was the sixth straight day of lighter than average volume in the NYSE, which makes sense considering that stocks have been stuck in a tight range during that period. Confirming yesterday's mixed price action, market internals were mixed as well. In the NYSE, declining volume marginally exceeded advancing volume, but the ratio was positive by approximately 3 to 2 in the Nasdaq.

In the March 24 issue of The Wagner Daily, we pointed out that the Gold Mining Index ($GOX) had closed just above resistance of its daily downtrend line and was positioned for further upside. Unlike many other industry sectors that have only chopped around over the past several days, the $GOX index actually followed-through with further gains. Over the past two sessions, the index has cruised 6.9% higher while the rest of the broad market has done nothing. The $GOX also closed yesterday above its 50-day moving average for the first time since March 3. Take a look:

After such a strong move in a two-day period, we would not be surprised to see the gold stocks consolidate for a few days, but odds are now even greater that the $GOX index will at least rally back up to test resistance of its prior all-time high. We would consider buying the strongest gold stocks on any retracement of the $GOX index down to support of its 50-day moving average. A subsequent breakout above the high of a multi-day consolidation would be equally buyable. The Gold Trust ETF (GLD) has also been showing strength over the past several days, but its chart is a bit sloppier than many of the individual mining stocks, so it may be a better bet to hold a small basket of mining stocks as opposed to the ETF that tracks the price of spot gold.

Each of the major indices closed yesterday within their respective trading ranges of the prior day's session. As such, the same support and resistance levels we illustrated in yesterday's Wagner Daily remain valid going into today. Obviously, all eyes will be on the Federal Reserve Board's announcement on interest rates at 2:15 pm EST today. While most of Wall Street is already expecting another quarter-point rate hike, it is the tone of the wording that may provoke a reaction in the stock market. Remember this is the first FOMC meeting since Fed Chief Bernanke replaced Greenspan, so any number of surprises is possible. As always, don't get caught up in your interpretation of the announcement as being positive or negative because the only thing that really matters is the market's reaction. We recommend you review yesterday's newsletter in order to make note of the pivotal support and resista! nce levels that the major indices may test on any strong reaction to the Fed announcement.

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.