The Keys To The Market Revealed

The markets opened sharply higher this morning on the back of a weaker Dollar and anticipation of massive stimulus from the Federal Reserve on Wednesday. After an initial run higher, the markets reversed course, pulling back as the Dollar caught a bid. The SPDR S&P 500 ETF SPY is trading higher at $118.97, +0.49 (+0.41%). Right now it appears they will keep this market flat to higher into the elections tomorrow and the FOMC Policy Statement on Wednesday at 2:15pm ET. Volume should remain low until Wednesday. The biggest reversals of the day have come from commodity related stocks which were jumping earlier on the weak Dollar. Since the Dollar turned to the positive side, these stocks have dropped sharply. A good example of this type of drop would be Chevron Corporation CVX. Chevron traded as high as $84.08 +1.48 on the day. It has now fallen back to $83.02, +0.42 (+0.51%). International Business Machines Corp. IBM was trading higher on the day, but also reversed. It now trades at $142.49, -1.11 (-0.77%). The markets continue to be on pause for the second round of quantitative easing by the Federal Reserve. The expectations are for $500 billion to $750 billion. Just for clarity sake, make sure each and every one of us realize the Federal Reserve is acting as the buyer of last resort of U.S. debt. In other words, they are picking up the slack in buying debt that China and other countries no longer want to buy. This is extremely scary. The markets have not realized this yet but will soon enough. If the only way the United States can fund itself is by the Federal Reserve, we are in a heap of trouble. Gareth Soloway Chief Market Strategist www.InTheMoneyStocks.com