For some time, we have been waiting for this market to pull back from its recent run and it appears we are beginning to get at least a small pullback. A three day losing streak for the NASDAQ is not something we have been accustomed to after the lows back in February. Earnings fallout does continue, but for the most part the major market averages have been able to hold relatively well. This is a Fed week and will most certainly influence action all week long. How dovish will the Fed statement be? It may be difficult for the Fed to be even more dovish without cutting rates or even starting another round of quantitative easing. We need to remain in control of our actions and act according to our strategy.

We really can’t see the Fed raising rates at this meeting nor June’s meeting. Futures market have the odds at 0% for Wednesday and 20% in June. If the central bank wants to push equity prices higher they will have to squash any notion a June rate hike is in the cards. The other thing the central bank could do is mimic is the BOJ and their ownership of stocks. That would be something if the Fed owned 10% or more of those in the S&P 500. What kind of multiple the Fed would be willing to pay?

A potential pitfall for the market could be the US Dollar. All this central bank talk sharp movements in currency markets can always have an impact on equities. Hedge Funds have a tremendous, record amount of bearish bets against the US Dollar. A short covering rally could induce a huge rally in the dollar putting pressure on commodities including crude. All of this is guess work. It is best to stick with price.

Given where we are with this market today was not all that bad. It does help this market if the Fed gives this market another reason to rally. Bumps in the roads may appear, but for now our uptrend is still viable. Let’s see where it takes us.