I have been, and will continue to be, a critic of how the Fed has handled monetary policy in reaction to the Great Credit Crunch. The decision not to begin tapering the QEs just continued to inflate the bubble in the U.S. equity markets. The 0% funds rate and the Quantitative Easing have not worked!
Treasury yields declined to my monthly pivots at 2.725% on the 10-year note and 3.738% on the 30-year bond. If yields end the week below these pivots, lower yields are likely in the weeks ahead. Otherwise, yields can rise again on the fear that monetary policy will fuel inflation.
iShares 20+ Year Treasury Bond
The price of gold traded as low as $1291.5 an ounce before the Fed statement then rallied to $1375.4 on Thursday. The weekly chart will be positive with a close this week above its five-week MMA at $1353.0. Extreme volatility is not surprising with my monthly value level at $1224.6 with annual and quarterly risky levels at $1599.90 and $1603.0.
SPDR Gold Trust
The rebound in crude oil following the Fed statement was $108.99 on Thursday shy of my semiannual pivot at $109.84. Oil traded above the 50-day SMA at $106.71, but is below this key level this morning. The weekly chart is neutral with the five-week MMA at $106.44. A close today below the five-week with momentum still overbought is the neutral configuration. The 200-week SMA is a support at $90.79.
Energy Select Sector SPDR Fund
My conclusion in my pre-FOMC post Wednesday was simple, "It seems highly likely that all five major averages will power to new highs given a positive reaction to the Fed statement and to comments by Ben Bernanke at his press conference this afternoon."
In my opinion the FOMC decision not to taper will further inflate the equity bubbles and risks re-inflating the gold bubble and oil bubble.
The Dow set its new all time high at 15,709.79 on Wednesday. The S&P 500 set its new all-time high at 1729.86 on Thursday. The Nasdaq set a new multi-year high at 3798.15 on Thursday. Dow transports set its new all-time high at 6743.85 on Thursday. The Russell 2000 set its new all-time high at 1080.49 and Wednesday.
If the Nasdaq ends this week above its annual and monthly pivots at 3759 and 3772 the upside is to the semiannual risky levels at 16,490 Dow Industrials, 1743.5 S&P 500, 7104 Dow transports and 1089.42 Russell 2000.
My annual value levels remain at 12,696 Dow Industrials, 1348.3 S&P 500, 2806 Nasdaq, 5469 Dow transports, and 809.54 Russell 2000.
These levels are shown in today's Market Pulse:
SPDR Dow Jones Industrial Avg ETF Fund
PowerShares QQQ Trust Series 1
SPDR S&P 500 ETF Trust
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.