Who Cares About the Dollar or Inflation?

Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show "Investors Edge" on over 50 radio stations. Gary is also editor and publisher of "Gary Kaltbaum's Trendwatch"...a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary's Daily Market Alerts click here or call 888.484.8220 ext. 1.

FOX BUSINESS NETWORK OCTOBER 15TH

For weeks, we have watched as the markets buckled under pressure of the hedge fund/housing/mortgage problems. We saw the Fed first lower the discount rate. We saw the Fed send in hundreds of billions into the system. All this led to Tuesday where speculation ran rampant about the Fed's next move. In the past couple of weeks, the Fed telegraphed a small cut by sending out the talking heads to tell everyone the Fed would not bail out wall street. They lied. On Tuesday the Fed went for the whole pie lowering both fed funds and the discount rate by a half point. The news boosted stocks in a hurry...above the resistance I outlined in my last report. At that time, I stated the market had a chance...and it took everything it was worth.
Tuesday's move just added a huge exclamation point on the follow through day of Aug. 29. At that time, I was quite skeptical that the move would work because of the light volume but mostly because there were too many areas of the market that were in poor technical shape. The Fed took care of those areas as they lit up like a pinball machine on Tuesday. FINANCIALS popped...RETAIL popped...even the left for dead HOUSING stocks popped. In other words, the floor lifted for the worst areas. The best areas and the leading stocks I have mentioned just continued on their merry way.

I believe in the markets first as I have always taught you that it is not the news...it is how the market reacts to the news...and Tuesday's action just provides solid evidence that the follow-through day on August 29th was for real. Keep in mind, before today, major indices were flat from August 29th. As usual, I will tell you I do not know how long this move lasts...or how far it goes. But price and volume were compelling...which means it is time to take advantage of any further move up.

Keep your wits about you and relax. I can promise there will be more curveballs as the last of the bad news is not nearly over. As long as we continue to see accumulation and as long as we don't start to see distribution, we go with it. I will be looking for leading stocks to emerge from proper consolidations on heavy volume.

No ranting in this report. In my next report, I will start barking about the Fed again...as well as an ever-sinking dollar. But who cares about the dollar or a chance for out-of-control inflation...or a Fed who is easing with full employment with markets just a smidge off their highs. No biggie...right! Just think about today!

Gary Kaltbaum