Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

Unless you were quicker than the ticker to change direction yesterday, you likely ended up with a bloody nose… or worse. Hopefully that was not the case, but it’s now time to focus on finding swing trade setups (two days to three weeks) to the short side.

Markets shuffled sideways in a range all day until a little after the FOMC announcement hit the wires and investors had time to digest the wording. The bond curve flattened, stocks tanked, and the U.S. dollar ripped higher. 

After finding resistance at the 1,220 area on Tuesday, the S&P 500 proceeded to fall right down to the bottom of the much discussed bear flag (parallel white lines). The 1,166 level, which is where the index closed yesterday, is more or less the last line of support before sliding back down toward the 1,100 area or below. The stochastics also don’t look rosy for the bulls and indicate lower levels are very likely. 

If we take a close-up look at the S&P 500 with the hourly chart going back to early September, we note that yesterday’s closing level is right at (actually a little below) the key 61.8% Fibonacci retracement of the rally from Sept. 12 to Sept. 20. This is a key level on multiple time frames, which makes it all the more relevant if it were to fail on a daily closing basis.

More proof of yesterday’s weakness can be found in emerging markets stocks, in this case as measured by the iShares MSCI Emerging Markets Index Fund (NYSE:EEM). The weekly chart below shows the break below a support level (white line) and how much more room it has to fall.

The chart I have pointed out time and time again over the past few months in this column is that of the dollar index. It remains the most important chart on my screens day in and day out. 

Two weeks ago, the dollar first busted a move by breaking above the lower blue line, and now this week is breaking above the upper blue resistance line. That’s good news for dollar bulls, but intermediate bad news for stock bulls. 

The charts have spoken, and while the S&P 500 is arguably still hanging onto support by a thread, it won’t take much to push stocks below support and to lower levels.

• See Sam Collins’ Daily Market Outlook: How Low Will the Dow Go?
• See Sam Collins’ Trade of the Day: Leveraged ETF to Play the Fed Sell-off