The market got off to a rough start yesterday morning, but stocks again demonstrated their amazing resiliency by grinding their way back to near unchanged levels in the afternoon. Both the Nasdaq Composite and Dow Jones Industrial Average were flat, while the S&P 500 slipped 0.1%. The small-cap Russell 2000 was also down 0.1%, as the S&P Midcap 400 was unchanged. All the major indices finished near their intraday highs.

Turnover surged higher across the board. Total volume in the NYSE was 14% higher than the previous day's level, while the Nasdaq volume increased by 15%. Technically, it was not a "distribution day" because the major indices were little changed, but bearish churning was definitely present. Volume was much higher in the morning while stocks were selling off, then dwindled as stocks recovered throughout the afternoon. It was our impression that institutions were dumping shares ahead of today's FOMC meeting, while retail investors took advantage of what they saw as a "buying opportunity." Certainly, it will be interesting to see the market's reaction to the Fed commentary after today's announcement on interest rates. Market internals were mixed. In the NYSE, declining volume exceeded advancing volume by a margin of 3 to 2. The Nasdaq was positive by the same ratio.

We don't have a lot of new commentary to share until we see the market's reaction to the highly anticipated Fed meeting. Over the past week, we have discussed several sectors we like on the long side if the market enters a healthy period of consolidation before going higher. Another ETF we came across is the S&P Select Materials Fund (XLB). Two days ago, it broke out to a new high from a band of consolidation, then held near the high yesterday. If we see a positive reaction to today's Fed meeting, this is another ETF that should see further gains:



We suggest laying low today and keeping tight stops on any long positions you have going into the 2:15 pm EDT announcement on interest rates. As usual, there will likely be a lot of post-Fed volatility, regardless of whether or not the Federal Reserve Board announces any shocks to the system. Beware of knee-jerk reactions, as if often takes a day or two until the market shows its true hand. We'll be there with updated technical analysis on the major indices after things have settled.

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.