The Fed Had Spoken - No Stock Left Behind, Only the Dollar

The

opened its mouth and now

, and continued to say that they would act, i.e. QE3 or other tools, if necessary. The stock market reacted positively and reversed a 180 points loss in the Dow to a 430 points gain in ~90 minutes towards the end of the trading hours. Investors praised the

Fed's move, and credited the Fed in staunching the loss in market's confidence. Some believed this persistent low interest rate environment will lead to higher consumer confidence and consumption, and ultimately lead to a better job market and economy. In reality, the confidence is now timed to two years, and everyone knows that the dollar can stay weak and possibly weaker, so they can continue to make investments overseas instead of the US to reap the gain just from the currency. Although it is difficult to tell whether this act by the Fed will help to improve the economy and reverse the prospect of a double-dip recession, as no one was expecting the Fed to raise interest rates anyway, the market is too oversold to not take notice. Nonetheless, the news is not the same a QE3 and the prospect of a global slowdown is still present. For the bulls, this is another buyable moment and they can focus on the 'even bigger to fail but dropped too much recently' stocks such as Morgan Stanley

, Bank of America

, J.P Morgan

, etc. or use financials ETF such as Direxion Daily Financial Bull 3X Shares

to juice up the leverage. Another angle, which might be a safer route, would be to buy preferred stocks in financial institutions such as Morgan Stanley Preferred A

, Goldman Sachs Preferred A

now that a low interests environment is guaranteed for two years. For those who are skeptical of the recent strong move in the market and high expectations on precious metals, they can consider shorting silver using the iShares Silver Trust

. Instead of Gold

, Silver is generally much more speculative, and seeing that Gold spiked while Silver dropped after the Fed's comment should give hints that Silver at this stage is a less attractive investment vehicle in the bet against a declining US dollar. The bi-winning Fed might have put a short-term bottom in the market with its 2 year commitment to a low interest rate environment, but if the global market continue to slow down, there could be more pain ahead for the stock market.