Don’t Fight the Fed

The Fed’s surprise move yesterday has changed the financial landscape. Their is an old saying on Wall Street which says don’t fight the Fed. Clearly that was the case yesterday. While the Fed is doing everything in it’s power to ensure the economy does not implode the immediate reaction is the US dollar selling off sharply. We expect this devaluation of the UD dollar to continue which should translate into higher commodity prices going forward.
The bias in the equity markets continues to be toward the upside short term. Expect strong resistance for the S&P June contract at the 800/810 area. With option expiration tomorrow expect a lot of volatility. The typical pattern is a lot of movement the day before expiration (which is today). While we will get a significant pull back as the market looks for a bottom we are not expecting that to occur until early next week. We continue to trade the support and resistance levels.

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