Buying Opportunity?

Thursday Sept 21, 2011 8:30 AM CST Market Open 

Stocks slumped 282 DOW points after the delayed FED announcement yesterday. Such announcements usually result in the exact opposite of what will eventually happen. 

An example would be Reagan's announcement at 10:00 AM during trading hours that Greenspan would replace Paul Volker as the FED Chairman. The long bond immediately dropped the limit at the time of 300 basis points. It then recovered. The sharp drop was a buying opportunity. 

Recent FED announcements have had similar consequences. 

30 Yr Bond Price

As I write the S & P is only down 19 points, but gold has dropped $71 and silver is down 8% and oil has dropped near $5. This is precisely what we told you would happen on a strengthening dollar. But I suspect what we will see is the QQQ hit that lower trend line I described Monday Sept 19. 

Stocks will bottom when the VIX and TLT hit their tops just as we have described to you in recent updates. The anticipation and reaction to the FED announcement is simply compressing the time frame. Hence it may all be over  in one full day's trading as the FED really started yesterday at 2:30 PM EST.

9:36 AM CST

Interestingly even amid the panic selling this morning the VIX is registering a lower high. the previous highs occurred at higher stock market valuations. This tells us that believe it or not, there is less fear this morning via the VIX than there has previously been.