The Technical Picture

But first, from the Fed's press release:

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace.  Labor market conditions have improved further, with strong job gains and a lower unemployment rate.  On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish.  Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power.  Business fixed investment is advancing, while the recovery in the housing sector remains slow.  Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices.  Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.

Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.  However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.  Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

No surprises.

S&P 500

Near-Term

• unable to move above 2065 to test the highs at 2093 (and move to higher highs), the market is looking for direction.
• a test of near-term support at 1990 is happening now.
• Fundamentally, with PE's at 17.3, well above average, the market needs a reason to remain expensive, otherwise in the short-term, traders will look for better value at cheaper prices.

Longer-term

• If support is broken at 1990, corrective forces may bring about of a test of the longer-term trend just between 1875-1900.

As I have discussed in previous blog posts, the strength of the $US and global economic weakness are forcing global companies to re-assess their outlooks for revenue and earnings growth.

Reduced expectations may also be a catalyst to drive prices to better value.