Stocks trended lower in the last hour of the session after trading higher most of the day. The Federal Reserve said the economic recovery was still too slow to bring down unemployment, reaffirming its commitment to purchase $600 billion in bonds to stimulate growth and create jobs.

Even though the indexes closed higher, investors were on edge after Monday's failed rally and also because of the loss of momentum in some of this year's best performers such as CRM, FFIV, NFLX, PCLN, RVBD, etc. This market is not easy to trade and strategies are being tested more than ever. It has become a chart game and the winners are the traders that can properly pick the bounce in the right names.

The Dow Jones Industrial Average ended up 48.10 points, or 0.42%, to close at 11,476. The S&P 500 rose 1.13 points, or 0.09%, to close at 1241, and the NASDAQ was up 2.81 points, or 0.11%, to finish at 2627.

The CBOE Volatility IndexI:VIX closed up 0.34%, at $17.61, after trading as low as $17.33, on overall put volume of 51,000 contracts compared to 274,000 call contracts. Resistance is at its ten-day moving average of $18.24. Volatility increased on the close even though statistics reveal the tendency for implied volatility to trend lower after the December Fed meeting. 60-day implied volatility is trading at 70 and 90-day implied volatility is at 68, indicating slightly lower price movement in the outer month.

SPDR S&P 500 ETF (SPY) - Get Report volatility was stable on active volume as traders used clarity given by the Fed to adjust positions. SPY touched a new 52-week high at $125.23 intraday, but came back in to close up $0.11, at $124.67, just slightly below its September 22, 2008 high of $124.75. Overall, 1.55 million put contracts traded compared to 733,000 call contracts, with December 120 puts as the most active series on 364,200 contracts. January put option implied volatility is at 17 and February is at 18, below its 26-week average of 22.

The PowerShares QQQ Trust (QQQQ) closed up $0.10, at $54.40, on overall put volume of 174,000 contracts compared to 152,000 call contracts. January put option implied volatility is at 18 and February is at 20, versus its six-month average of 23, indicating decreasing price movement. QQQQ has support at its 10-day moving average of $53.99, with psychological resistance of its high of $55.07 from November 2007.

Earnings flow will be relatively quiet for the remainder of the week with the exception of Thursday: ACN, DFS, FDX, GIS, ORCL and RIMM. Traders will be watching FedEx (FDX) - Get Report for an update on holiday shipping trends and Accenture (ACN) - Get Report and Oracle (ORCL) - Get Report for an outlook on how tech is pacing. Investors will keep an eye on the Master Trust numbers due out on Wednesday and Discover Financial Services (DFS) - Get Report earnings on Thursday for a look into the credit space, as well as details on the Durbin component of the Dodd-Frank financial regulatory reform bill for more color on the restriction of anti-competitive practices in payment processing and debit card interchange fees.

The following economic data are expected to be released Wednesday: MBA Purchase Applications due out at 7:00 a.m. EST, Consumer Price Index and Empire State Manufacturing at 8:30 a.m. EST, Treasury International Capital at 9:00 a.m. EST, Industrial Production at 9:15 a.m. EST, Housing Market Index at 10:00 a.m. EST and the EIA Petroleum Status Report at 10:30 a.m. EST; Thursday: Housing Starts, Jobless Claims and Current account due out at 8:30 a.m. EST, Philadelphia Fed Survey at 10:00 a.m. EST and the EIA Natural Gas Report at 10:30 a.m. EST; Friday: Leading Indicators due out at 10:00 a.m. EST.

Overseas, Ireland's parliament vote is expected on Wednesday where the IMF/EU bailout will be debated. Early indications suggest that opposition parties may vote to reject the aid, although the votes seem to be there for passage. The EU Leaders Summit will take place on Thursday and Friday and while nothing too substantative is anticipated, there will be a lot of headlines about the sovereign debt situation in Europe and the officials ability to agree on a way to handle pockets of debt problems and bolster confidence in the single currency. Kit Juckes, a currency strategist at Societe Generale, told the Wall Street Journal that, "If the summit fails to provide investors with a solution to these issues, we will see a further loss of confidence in the euro and wer could easily move back to a fully fledged crisis."

OptionsProfits For actionable options trade ideas from a team of experts, visit TheStreet's OptionsProfits now.

Readers Also Like:

>>Booming Brazil

Readers Also Like:

>>Testing the Theory of Maximum Pain

Readers Also Like:

>>3 Most-Loved Tech Stocks to Sell