The FED moves!

Good morning,

Yesterday's market action was, well, volatile. Today's market action will be a carbon copy of yesterday's. Yesterday, FED Governor Poole said there's no need for the FED to act on interest rates. The DOW fell 340 points only to rally back to almost unchanged. The market is down sharply again this morning and then, WHAM, the FED cuts the Discount rate by 50 basis points. Hmmm. No need to lower rates but, what the hell, we'll cut rates anyway. Now, it was the right thing to do as far as I'm concerned but it's too little, too late. Frankly, the FED doesn't have enough ammunition to ward off what's ultimately going to be the end result to the 5 years of abuse in the mortgage and real estate markets.

I've continue to buy Gold on these violent dips and I'll continue to SELL the DOW on these reaction rallies to events such as the one we've had this morning by the FED. I think it's easier to buy Gold on these dips than it is to SELL the DOW because the stock markets have been beaten up pretty good. There could be a very sharp rally off the interest rate cut so be careful. The market will tell us when the rally is done. Stay tuned!

Dale F. Doelling
President and Chief Market Technician
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