Tuesday afternoon the Fed announced it was keeping its balance sheet intact while changing the composition of said balance sheet by moving out of mortgages and into long-term Treasuries. This news triggered a strong surge in the Treasury complex, sending the September Treasury Bond to a new high for the year. The move by the Fed is designed to keep the pressure on long-term rates.

Stocks rallied from earlier lows but still managed to finish lower for the session. The action by the Fed triggered an intraday short-covering rally as traders felt relief the Fed did not take more aggressive action which would have sent a pessimistic tone throughout the markets.

The September E-mini S&P 500 remained rangebound for the seventh day, thereby setting up a possible volatile move over the short-run. Clearly the chart suggests a breakout to the upside over 1129.50 while a break under 1107.00 is likely to trigger a correction back to 1065.25 over the near-term.