It has been a very long time since we've seen this sort of market action. It turned out to be a classic "sell the news" reaction to the FOMC. Although there wasn't anything surprising or negative in the FOMC policy statement, it served as a very good catalyst for sellers. We initially spiked up in almost giddy fashion, and once the selling started, we ran straight down, and even the dip buyers stood aside and just watched.
I can't even remember the last time we had an ugly reversal like this and finished at the lows. A lot of folks have been looking for some selling to kick in and the Fed today just turned into a very convenient excuse.
I don't want to make too much out of this reversal as the market still hasn't done that much wrong. It is the first poor day in weeks, and the market can easily afford it without destroying its uptrend. Nonetheless, some increased defensiveness is warranted.
Moving forward, what we have to look for is a change in the aggressiveness of the dip buying. That has been the key to this market since March. If the dip buyers lose some of their enthusiasm and we start seeing strength sold, then it will really be significant.
The bears finally put a couple points on the board, but the score is still very lopsided in favor of the bulls. The bears have a very long way to go before they shift the tide, but at least they showed up for once.....