The stock market chopped up and down after the FOMC statement at 2PM. The Federal Reserve opened the door slightly for a rate hike in September. The markets initially reacted with sell side action but quickly recovered. Why did they recover? The market does not believe the Federal Reserve will hike rates, no matter what they say or claim.

Even with the general dovish statement reaction from the stock market, plus $AAPL earnings, the S&P 500 closed float to slightly lower. Is this a warning sign? I am not sure about a warning sign but it definitely is not bullish. The market has a bull flag on the daily chart and after putting the Fed statement behind the market and those AAPL earnings, investors mostly thought the markets would have soared.

After the bell, Facebook ($FB) and Amgen ($AMGN) reported earnings. Facebook spiked dramatically higher, hitting $133 from a closing price of $123.34. Amgen initially popped higher but then pulled back, trading at $169.60 from a close at $170.68. So far the S&P 500 is flat after-hours.

On the $SPY chart (the tracking ETF for the S&P), watch the level I continue to point to. I call it the Danger Zone. As long as the markets stay above it, stocks have the potential to go higher. Any sort of break below, and the markets will see heavy sell side action. Note the chart below.

Jenny Rebekka