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Well, Big rally…now what

March 11, 2008 8:26 PM

The Fed got the financials turned around in a big way by taking $200 billion of their crap and said they would take more. Nothing like giving away a few hundred billion to get the markets going.

The significance of this move, as opposed to huge rate cuts, which I believe would have plunged the markets, is that they may not have to cut as much near term now. Rate cuts are plunging the dollar and causing major inflation fears - and rightfully so. So throwing gas on that fire is a huge mistake, IMO.

I believe this rally will last at least through tomorrow. After that it gets dicey. There are no reversal points on the futures to at least 1244 if I recall correctly and not much news tomorrow. Shorts will let this run and then scalp the hair off the longs again as soon as reality sets back in.

The thing that I do not like here is that we have ONE point of reference to be long to stop selling in the future 1386.25 on the futures. Therefore, once ugly news sets in down the road, we will most likely revisit this issue again.

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