Although the averages were able to inch their way higher after a choppy start to the day, some late pressure pushed the market lower, ensuring a mixed finish to the day. Once again, volume was very light, but even though market players didn’t seem too willing to place many big bets, there was some decent action in the small-caps.
This market has shown marked improvement over the past several weeks, but with the FOMC meeting looming and the averages barely poking their heads above lateral resistance levels, (for those that believe), the bulls are starting to show signs of fatigue.
Of course, it’s hard to blame buyers for any uncertainty at this point. We’ve had a good run, and not only is it unclear as to what sort of tone Dr. Bernanke and his merry band of economists are going to adopt, but the way investors will react once the news is out is completely up in the air.
The Fed has to be looking at recent inflationary pressures, and the general consensus seems to be that the current easing campaign may be coming to an end. A pullback may be looming.
The ball is still in the bulls’ court, but that doesn’t mean we shouldn’t be aware of the possibility that investors may move to protect some of the recent gains sooner rather than later.