The Nasdaq posted a respectable gain on Fed Day, but percentage-wise it lagged somewhat compared to the Dow, S&P 500, and Small Caps. Small caps set a new all-time high, which is a sign that “animal spirits” are driving this rally. That bodes well for new highs in all the indices.
Somewhat contrary to my expectations from years of watching and trading Fed news, the rally was smooth and straightforward, with no head fakes at all. This behavior is unusual and suggests a broad consensus that the Fed is still the market’s friend.
The NQ reached our first good news target of 4420, closing at 4421.25, and the index is up a bit in after-hours trading. Markets usually pause after large moves, so I don’t expect much follow-through on Thursday. Upside targets are indicated on the Volume Profile charts.
A Note on Volume Profile
The histogram on the left side of the chart shows the volume distribution in the S&P futures for different periods of time. Key support and resistance levels are indicated by the peaks and troughs.
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