Stock Market

As posted on Sun. 3/16, the rally potential straight ahead
was decent enough. The market again plumbed the SP 500 low
test zone of 1260 - 1270 on Monday before pulling up on
basket trades, but today the action was far stronger and
broader. Yesterday's horrendous breadth put my selling
pressure gauge into very strong oversold territory.

The low test zone has been hit several times since mid -
January and today's action built around another 75 bp cut by
FOMC to cut the Fed Funds Rate (now 2.25%) was impressive
enough, but from a chart perspective it is still anyone's
guess whether the bears come in again and trash the rally.

There is obviously an economic downturn underway in the US,
and the hard asset/commodities crowd may have been looking
for a bigger cut in the FFR% to feed their bubbly markets.
Gold tanked this afternoon from the $1000 oz. level to $976.
I point this out, because disenchantment by the pro-inflation
crowd could help the stock market.

From my perspective,the Fed has done quite enough for awhile
in cutting rates and in liquifying the credit markets. Time
comes around once in a while to stop and survey the handiwork
to date. The Fed also needs to get nastier with Paulson and GWB.
The latter two have been functioning in this crisis like FEMA
did after Katrina. I have mentioned in prior posts that in a
crisis like this, the regulators need to allow lenders not
only to book only cash losses, but to spread them out over time
to maintain liquidity and capital. Paulson has simply not
grasped the bigger picture and has failed to use the regulatory
levers at hand properly. Sermon over.