The indices closed slightly lower on Monday on rampant speculation of Tuesday's upcoming fed rates announcement. Volume was light on another slow Monday, holding our expectations heading into the day and making for a higher risk trading environment. The Dow Jones Industrial Average ($INDU) lost 20.97 points on the day, closing at 11,219.38. The S&P 500 fell 3.59 points to 1,275.77. The Nasdaq, which was the weakest of the three overall, lost 12.55 points, ending the day at 2,072.50. Trading throughout the session was very choppy, despite several solid trend moves on the 15 minute charts. The only real excitement was a spike in crude oil after BP announcement a shutdown affecting 8% of the country's oil output in order to fix a section of the Alaskan pipeline.

After hitting 15 minute 20 simple moving average resistance into Friday's close, the market continued to react off that level heading into the open on Monday. Support hit at the 5 minute 20 sma heading into the 9:45 ET reversal period. This led to a period of congestion over the next half hour before the support gave way to another round selling. Given that the congestion retraced more than 50% of the opening decline, the market found a little bit of support heading into morning lows, but quickly continued south until finally hitting support from the zone of Friday's lows and the Dow's 15 minute 200 sma support.

The indices turned over into lunch, slowly gaining momentum into noon. Three waves of buying followed the reversal on the 5 minute charts. The pace was slightly more gradual than the prior selloff on the 15 minute time frame, but still strong enough to take the indices back into the zone of the prior 15 minute highs and 5 minute 200 sma resistance in the Dow and S&Ps. This hit around 13:30 ET. The channel broke quickly and a third intraday trend began, once more leading the market back to the prior intraday lows. This time the pace was slightly stronger and the market managed to make a lower low into the last hour of the day. The action remained very choppy, however, and the indices did not correct enough at the support to allow for a continuation of the selling into the close.

The current consensus is that the Fed will finally end it's steady policy of quarter-point rate hikes on Tuesday, leaving the overnight bank lending rate at its current 5.25%. Even with this news, the market is likely to have a tough time moving significantly higher since the upside has been on light volume and quite choppy in recent weeks.

Typically the Fed reaction will be three-fold on two time frames. Initially there is a three wave reaction on the 1-2 minute charts with one move, a counter-move, and then a return to the initial direction. This three-wave activity is then repeated on the 5 minute charts. Often the second move, countering the first, can be stronger than the initial reaction, so it's important to not think that the market has actually reversed and will continue with the trend of the second move. This is rarely the case. I do not expect to do much ahead of the announcement this time around and will likely remain less active until Wednesday.

Economic Reports and Events
Aug. 8: Productivity-Prel Q2 (8:30 am), FOMC policy statement (2:15 pm)
Aug. 9: Wholesale Inventories for June (10:00 am), Crude Inventories 8/4 (10:30 am)
Aug. 10: Initial Claims 8/5 (8:30 am), Trade Balance for June (8:30 am), Treasury Budget for July (2:00 pm)
Aug. 11: Export Prices ex-ag, Import Prices ex-oil, Retail Sales, Retail Sales ex-auto for July (8:30 am), Business Inventories for June (10:00 am)

Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stock's earnings date before holding a position overnight.
Aug. 8: AFR, BMC, CELL, CVC, CMX, CRL, CHRD, CSCO, CCU, CMLS, DNDN, DIGE, DCEL, HLTH, ETR, FMT, GMST, GGP, GIGM, GSS, KOSP, LAMR, LNC, MGAM, NWS, NUAN, RL, PVX, QSFT, RRI, SAPE, SLE, STX, TEVA, DTV, UMC, WPI, WNR
Aug. 9: LEND, ACS, AIG, SIL, RMK, AVT, CSE, CPST, CD, DYN, FWLT, GE, HSP, HGSI, IO, KG, LBTYA, MIR, HAWK, PGN, THC, IPG, UTSI, DIS, WCI
Aug. 10: AAP, AIRN, ADI, BVF, BGG, EAT, CREE, DISH, ELX, EXPE, FMD, GG, ING, JCP, KSS, MOVI, NXG, NVDA, PSUN, TGT, TOMO, UBB, URBN
Aug. 11: CCUR, ERJ, IAG, PBR
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.