Where to Start-

Let me just say that the new Internet Explorer sucks. I don't mean a little-I mean a lot. I had about 1500 words of a post done when it just decided to crash for no reason. It happens nearly everyday. Firefox is too damn slow to load-ideas anyone?

Now, onto today's events. Lets start with the Fed meeting. As expected, the Fed left rates as is, no surprise there. As usual, Richmond Fed President Jeffrey Lacker dissented for a fourth straight time, however this will be his last chance to do so as he won't vote again until 2009. The only inclusion in their policy directive that caused a minor stir was the word "substantial" in describing the housing cool down. That lit a small fire under the bottoms of bond traders who proceeded to drive the 10 year treasury down to 4.49%. The action in treasuries provided an opportunity for rate sensitive banks to halt some of the bleeding in the Financial sector. Other than that, there wasn't too much to get excited about and that in and of itself, was the crux of the dilemma.

The market has been eagerly anticipating a cut next March. In fact, the last time I saw it, the Fed futures were pricing in an astonishing 90+% chance of a rate cut in March. In fact, earlier in the week, the implied policy rates priced cuts in March, June and September leaving the rate at 4.5% in Sept 2007. The market may be way ahead of itself on this one as the Fed has given no ground in it's stance and no hint of any other course beyond that of watching inflation data with great concern. Usually the initial response to Fed meetings is chewed over for a few days before the market decides how it feels about it. I can't help but think there must be a fundamental revaluation considering the complete lack of corroborating evidence.

Further adding to the uncertainty is the situation in the $USD. As you know, the dollar has been on a steep negative trajectory. This week the mainstream press started carrying accounts of Russia and OPEC nations selling-off their dollar denominated assets in favor of the EURO. Of course they will try to do this as quietly as possible as to not reduce the worth of their remaining position. Lets break this down to the basic laws of supply and demand. A sell-off in the dollar creates supply and prices fall. Another effect of that is an inability for the US to sell their debt at auction as the market is already flooded with supply. One of the ways to increase demand is to make the yield more attractive-thus a rise in interest rates. It is far too early to speculate on this scenario, but then again maybe not. We'll see what the market decides in a few days.

While on the subject of the dollar-it was down again today as follow through off yesterdays apparent reversal of the overesold bounce. It has been my opinion that this bounce provided a good opportunity to get exposure to dollar related positions such as metals and energy. I do believe the trend in the dollar will be one of continued weakness making stocks in the gold, silver, copper, etc. sectors an attractive alternative especially if the apparent market weakness we are seeing develops into something uglier than it is now, as I suspect it will.

Lets touch on the major averages for a moment. If you haven't already, you may want to take a look at some of my recent videos as I display a series of negative divergences and other related weakness. All of the major averages were down today and apparently somewhere around 11:30 am a trade program kicked in a sent the averages plummeting. Take a look for yourself and compare all the averages together. The Spyders, Diamonds and to a lesser extent, the Q's have had unusually large volume throughout December and the last half of November with no meaningful price appreciation. This action is reminiscent of churning or distribution. The Q's (NASDAQ turned in today's worst performance)in particular are looking like they are ready to make a move as the Bollinger Bands start to pinch. The Russell 2k saw 1/3 of it's component's trading down on increasing volume. My scan of industry groups revealed only 18 of 239 trading up more than 1/2% today and none over 1.66% and that was Grocery stores! Conversely, 90 traded down more than 1/2%-it seems odd as the major averages weren't down that much. All of this taken into account with other evidence such as the multiple divergences have forced me to re-allocate my positions in favor of Energy, metals and short positions. Cash is probably the best idea at this point, but simply and honestly, I like to trade.

Tech was under pressure today as Apple reported disappointing sales for I-tunes, actually it was worded as "Sales are collapsing". This is just another piece of the puzzle pointing to rather dismal performance of retail oriented issues. Best Buy also turned in a poor performance as it missed expectations due to a "competitive environment". Our BEBE idea is up about 20% in a few weeks and the short in SWHC is taking on a life of it's own -13+%.

Probably the second biggest story of the day and one in which there seems to be great interest right here in our little piece of opinionated rants in cyber-space (mostly my own), was NUE (was that a run-on sentence or what?). So NUE sees Q4 coming in at $1.05-$1.15 versus previous estimates of $1.44. The bad news sent Steel stocks hurling up their recent gains and the negative sentiment even spilled over into other metals such as titanium (ATI, RTI and TIE) and to a lesser extent-aluminum. Nucor is the US's largest steel producer and is itself a bellwether for where Steel prices are going. You might even say "as goes Nue, so does steel." Typically when NUE warns, other Steel producers tend to warn as well. Steel has been one of the market's best performing sectors over the last few months and today's announcement was reason enough for traders to take profits off the table at the very least. The drastic nature of the decline and the fact that the other Steel producers haven't been able to recover, suggests that this news came as a surprise. So I expect there to be further volatility and most likely weakness as the market tries to discount the new information. We'll have to wait and see how deeply into the Metals and Mining industry this re-valuation will dig. XAU held up rather well as GS said they expect Gold and Copper prices to remain elevated throughout 2007. Also they expect more action in mergers and acquisitions in the sector. All this taken into consideration with the weakness in the dollar, should bode well for Gold and hopefully the sector at large.

Lets not forget Energy-I told you I wasn't sure where to start! Tomorrow could be an interesting day. OPEC has signaled it's willingness to keep oil above $60 a barrel, interestingly that level is the same as the 50 day moving average. Thursday OPEC will meet in Nigeria and the floor talk is centered on whether or not they will announce cuts. It is feared there will be a sharp sell-off if they don't. We'll also get a look at the Energy Dept. weekly oil inventories-that will be closely watched. Take a look at BTU and XTO, they've both held up pretty well and have been doing as I expected.

Also on the calendar tomorrow: 8:30 am release of Retail Sales Report will give us another look at consumer spending in this holiday season. After the opening bell, October Business Inventories will be released. Before the bell, COST, BSC, LEH, CIEN and PIR will report quarterly results. After the bell-ADBE and TEK will report.

The key to interpreting tomorrow's releases will not be the release themselves, but rather how the market reacts to each item, it's far more important then the news itself. Although the weakness I perceive is not yet showing in price and the moving averages, it is everywhere with regard to indicators, breadth and sentiment. We might just get a lump of coal in the stocking rather than the Santa Claus rally. PLAY IT SAFE!