The Fed rate cut of 50 basis points only signals that there is a serious problem with the underlying economy and that they missed the whole ball game. Only a month ago, they were saying the subprime problem was contained. However, the market only dwells on interest rate. Negative news do not mean much. Such a cut would only fuel rise in oil price and inflation. Tomorrow's CPI reading will be interesting but the Fed has already sided with issues other than inflation which is supposed to be their prime concern. In addition, a crumbling dollar would make foreign investment in the US equity market less attractive.
In any case, the forecast for a down Monday, an up Tuesday was on track. Is it going to be a down day after the Fed day tomorrow? The Fed move has drastically changed the technical picture and certainly one would expect continuous up trend. However, this does not exclude a pull back tomorrow especially with a 300 point rise in Dow. Watch 716 and 703 for actons. Would be tempted to short if it gets to 716 area or if CPI is bad tomorrow morning. It has to come back to reality.
2c
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