On Wednesday, the market rallied into the Fed's rate announcement, showing speculator's optimism given the current downward trend. It also helped that, on Monday, the Nasdaq 100 (QQQ) held key support at $318, sparking a rally on Tuesday.

Now, with a rate increase of 0.25% the market continues to push higher off Monday's low. Additionally, with the market standing its ground for the moment, the transportation sector has pierced two of its major moving averages.

The above chart shows the transportation ETF (IYT) closing over both its 50-day moving average (blue line) and the 200-DMA (green line). Because the movement of goods is an extremely important factor within the economy, if IYT continues to hold over the $260 area, this could help the market hold its current price area. However, whether IYT can change the major indices' downward trend is another story, since this rally takes them back into a resistance area.

Having said that, Wednesday's positive close is still met with the reality of rising inflation and costs across the board. That is why we are continuing to watch the market from a stagflation/rangebound standpoint.

Overall, inflation has kept our eyes on commodities such as Gold (GLD), Silver (SLV) and food ETFs, such as Invesco Agricultural Fund ETF (DBA). While the equities market can enjoy brief runs in price, it is still a tough area to trade, as the market has yet to show it can change its overall trend to the upside.

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ETF Summary

• S&P 500 (SPY): 410-415 support. 441 resistance.
• Russell 2000 (IWM): 188-193 support. 203 50-DMA to clear.
• Dow (DIA): 322-326 support. 342 resistance.
• Nasdaq (QQQ): 318 support. 350 to clear.
• KRE (Regional Banks): 73.21 the 50-DMA to clear.
• SMH (Semiconductors): Needs to hold over Wednesday's low at 250.
• IYT (Transportation): Needs to hold over 260.
• IBB (Biotechnology): 118 support. 129.95 50-DMA to clear next.
• XRT (Retail): 78 resistance. Now 75 to hold.

Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education