The statement from the Fed was not really accommodative to bulls or bears. The Fed did recognize that Katrina will have an effect on spending, production, and employment, but there was no bold statement that they stand ready to pause.
If the markets are satisfied that the Fed is correct in its reluctance to become concerned about the effects of Katrina, then maybe some upside can unfold, but only closes above NASDAQ 2175.21, S&P 500 1242.62 would be chart developments of significance to me.
Tuesday was volatile, and there were probably some heavy bets placed that the direction for prices should continue to be lower on Wednesday's open. This raises the chances for a little downside and then a small lift on Wednesday, as bears become frustrated that the opening does not blossom into a fully fledged round of panicked selling.
I think the markets have to spend a little time basing near current levels, or regroup at slightly lower levels. I would prefer to see an overt signal of oversold (short-term) before embracing the idea that the markets will move higher.
In the short-run, it would take a move and a close above S&P 500 1233.69, NASDAQ 2155.09 to start me second-guessing this view.
The NASDAQ has intraday resistance 2139-2147, then important resistance 2155-2162.09, resistance is thick 2158-2163, resistance is formidable 2165-2186.83, with a focus 2177-2186.83. Resistances are stacked, the next layer of chart significance is 2201-2249. Resistance thickens 2211-2233.
S&P 500 intraday resistance is 1232.15-1236.49. The index has formidable resistance at 1229-1242.62. A combination of several intraday plateaus creates a focus of resistance at 1238-1242.62.The next focus of resistance above 1245 is 1249.23-1267.
NASDAQ intraday support is 2131-2112.25. The NASDAQ's major support is 2106-2039, and it is a critical support, that, if broken would open the downside for sub 2000 prints. Inside the 2106-2039 support layer, there is a focus of support 2106-2076 and this is still a likely spot for the markets to make a stand (if tested).