If I had to write a narrative to overlay on the post-Fed price action, it would go something like the following: The e-SPZ immediately spiked to the upside-- to new recovery highs-- after the FOMC Policy Statement that keep interest rates at zero.
Thereafter, however, amidst the confusion of a muddled Yellen message that invoked "The China Card" and lowered expectations of U.S. growth and inflation expectations, the index sold off sharply, breaking its Aug-Sept support line at 1956/57, and thereafter pressing into key support between 1944 and 1920... only to partially reverse Sunday evening into Monday morning by weekend statements by several Fed Heads, who suggest, "don't worry, be happy," the Fed still intends to hike before year end!
All I have to say is that "the more things appear to change, the more they stay the same."
And what might that be?
Yellen's unwavering commitment to supporting the equity market to preserve "the wealth effect," to avert a global retrenchment that has the potential to sink the world into a downturn more debilitating than 2008-2009.
As for the pattern, my work argues that the recovery rally off of the Aug 24 low at 1823 ended at the Sept 17 Fed High of 2011.75, which if accurate means that a new downleg within the larger downtrend off of the May-July Top is in progress.
If my work proves correct, then strength should be sold, and/or used to establish defensive (short) positions in the days ahead.
Only a climb above the Sept 17 spike high will invalidate (neutralize) my current outlook.