It wasn't a cannon at Lexington and Concord but it might as well have been. It came from not that far away. The Fed surprised most people announcing they would buy $300 billion in long term Treasury's to help the economy recover. Basically the printing presses have started. Wait a minute. Wasn't Bernanke on 60 minutes just a few days ago saying everything is fine and the U.S. economy would be out of a recession by the end of 2009? This is drastic maybe even desperate action by the Fed and as the adage goes actions speak louder than words.
From a trading perspective this is actually setting up nicely. You have some major resistance between 800 and 805 on the S&P. We have gone just straight up the last two weeks. I would not be surprised to see some sort of correction back to the 740 level. This should be an exhaustion buying end today (or maybe in the first or second hour tomorrow morning) before I thin we have a very high probability to pull back. I think we will end up breaking 800 before this bear market rally is done but just like we can't go straight down, we can't go straight up. Of course it is never easy. The option expiration is on Friday and you have the end of the quarter on Tuesday (which I believe in countries like Japan is actually the end of fiscal year). Both of those could throw wrinkles in everything.
Gold had a massive reversal!!! Down close to $30 a ounce it is now up over $10 an ounce.
The race to debase. Here we go.