Light volume tends to produce market "melt-ups" and that looks to be exactly what we are getting. With school starting next week in most districts, traders are trying to squeeze in one last summer vacation and that will likely drop the daily volume to the lowest levels thus far in 2010.

There weren't any government economic reports on the docket, so traders (those that showed up for work anyway) were more focused on preparing for tomorrow's FOMC meeting. The Fed is still expected to keep rates at nearly zero, but there seems to be an uptick in speculation over when the policy might be adjusted and this could create a bit of chaos surrounding the release of the interest rate decision commentary.

As we noted on Friday, the correction that many were looking for seems to have come and gone in a single trading day. The technical set up now suggests that the S&P could rally up to 1140ish before finding some resistance. For tomorrow only, it might be a viable strategy to look to fade any FOMC rally to such levels.

Overall, our upside target in the S&P will be 1140 with the possibility of 1150ish. In the Russell, we think the odds favor a move to 680 and in the NASDAQ we are looking for about 1930 for starters.

*Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already factored into current prices, any references to such does not indicate future market action.

Please note: An e-mini S&P and e-mini NASDAQ chart are used because they better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.

Click on image to enlarge!

Click on image to enlarge!

Click on image to enlarge!

Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

For more from Carley, visit DeCarley Trading and register for her free e-newsletter.