Wednesday, March 21, 2007

Fed Opens the Door to a Rate Cut

As widely reported, the Fed has gone back to a neutral bias and stocks are taking off. 1430 on the S&P... above 66% fibonacci, and as noted yesterday I was wary of shorting into the rise we saw yesterday. The wariness also comes from the realization that the Fed has been ginning the system with massive amounts of cash as they did last July. 1430 is also above the S&P's 50 day moving average. You've got to be careful here since things are now looking overbought. Overbought doesn't mean it crashes tomorrow, it just means that the S&P has now risen 50 points off the lows point in a treacherous fundamental environment. 50 dma on S&P is actually 1424.. let's see if it can close above that level.

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