Bernanke and the Fed Provide More Reason To Sell the Dollar and Get Your Risk On

It was good to see a little action in the markets yesterday. It has been awhile.

I wasn't expecting much from the FOMC Statement, but the Fed delivered some pretty big news. Keeping interest rates low until "at least" 2014 is very significant. This is essentially QE, because keeping interest rates low allows the US to meet its debt obligations at the expense of the US dollar. This is nothing new, we have known the Fed's policy was to keep rates low, Bernanke already stated they would keep rates low until 2013. By saying yesterday that the Fed would keep rates exceptionally low through at least 2014 is just the Fed's way of driving the point home. The markets reacted accordingly, with buying. Equities up, precious metals up, commodities up, dollar down.

The Fed is just reminding the world that they plan to do everything in their power to debase the US Dollar. When consumption is low, investment is low, unemployment is high and huge debt/lower tax revenue is preventing the government from spending freely, the next best alternative to try and stimulate an economy is to debase the currency to make exports more attractive. This is the current strategy the US is implementing.

It will continue to be bullish for the market. We may see some fake-out moves to the downside in the near term, but the market is heading higher. Dips are officially buying opportunities in my opinion. The S&P 500 may be on its way to break 1400 now.

Before I get overly optimistic on future price action, I want to offer the reminder that all is not well in the world and the market remains vulnerable. The European debt situation has not gone away. The tension with Iran has not gone away either and these issues will create reason to sell equities at some point.

In any case, the Fed's Announcement yesterday provided more wood for the bullish bonfire. I like buying the dips. I continue to watch the 1287-1288 price level on the ES. If we do see a move that low in the coming days, it should be a great buying opportunity.