Options expiration will have clouded the volume picture, particularly for the S&P 500, but it was a day for buyers to build some momentum into the Santa rally. The FOMC rate statement put a huge dent in prior rallies, with the S&P now having to deal with a 'bull trap'.
Although it was the Russell 2000 (IWM) that finds itself most on the back foot having undercut its 50-day MA, and now looking at the 200-day MA as its next test. It was the only one of the lead indices to turn net bearish in supporting technicals; the November breakout gap is no more. What's more likely is a new trading range, bound by November highs, with the $205 level a possible support level.
The S&P had resisted much of the selling encountered elsewhere, but the FOMC put a huge dent in its performance. Its relative performance to peer indices was poor before the announcement and actually did a little better afterwards. For the remainder of the year we need to track how it does relative to its 50-day MA; if it can hold 50-day MA support, then it has a good chance to (re-)challenge 6,000 resistance.
The Nasdaq is the new market leader. It is outperforming peer indices and managed to close above breakout support after an intraday trip below that level.
As with the S&P, options volume clouded what comes in as an accumulation day. If you want a short-term trade for the rest of the year, then Santa has a good chance of delivering a retest of 20,000.
Honorable mention to the Dow Industrial Average ($DJIA). It turned net bearish in technicals, but found itself defending former resistance turned suport.
There is a chance to retest of its 50-day MA before the year is out, but it's not the most attractive of the trade opportunities available.
As a final note, the Semiconductor Index had registered a breakout, but was left staring in the face of a major 'bull trap' with technicals turning bearish very quickly.
While I more optimistic on Friday's bullish action in other indices, I'm less so with the Semiconductor Index. All of those converged moving averages are again resistance.
I'll be posting again in the New Year. Santa has still to visit, and for Futures traders there are nice setups on offer. I'll wait until 2025.