Tuesday review

What we learned from the Fed statement: USD is more screwed than anyone imagined.  Now that the Bernank has given us a time frame for further dollar destruction (funds rate exceptionally low through mid 2013), I can safely say this is a pretty good entry point for commodities.  I especially like oil and copper, both of which have been absolutely crushed these past couple weeks. The main driver of gold is no longer a safe haven from uncertainty but an alternative currency to those being debased.

Break out du jour post Fed:

Looks like USD is no longer gaining ground on the Euro, breaking the down trend line.  I expect it to test the short term highs of 144.75 sooner rather than later, driving commodities higher.  Not surprisingly we see oil 4% higher this morning -- still a great entry point in my opinion.   I am still cautiously bullish -- obviously more bullish than two weeks ago because I believe some great companies are now on sale due to forced liquidations by institutional investors and retail panic selling -- but cautious because the Fed was much more dovish on economic fundamentals than I expected.  Goldman sees a 1/3 chance of another recession, in which case they say "QE3 is their base case" scenario, which is negative for USD.  So we have two forces at play which could potentially neutralize commodities: a weakening dollar coupled with a weakening economy.  However, I still think there is upside pressure to commodities because economic expectations have been downgraded to such an extent positive surprises are likely.  Also, demand from emerging markets will ultimately drive commodities higher, until of course we see a hard landing in China (possible real estate bubble).

I like FCX on a reversal to the upside.  Looking at a 44.30 entry this morning, with a 47 target and 43 stop.

I will be continuing to watch SPX: 1170 resistance and 1150 support.  If we break 1170, looking to test 1190 and then 1202.  In Europe we are seeing a shift of risk from the periphery to core countries, with Greece and Ireland CDS coming in (Italy still at elevated levels) while Germany and France CDS trending higher.