WE'RE AT THE 50 DAY MA ON THE SPY, WHAT'S NEXT?

That's what I'm asking you...anyone know what will happen next? I was expecting a small rally today, but it ended up being more than I anticipated. This has got to be it for the bearish scenario. If we move above the 50 day MA, I will turn very neutral on the market. The good news for the bears was the Fed's raising of the discount rate today. We've already seen the downward pressure on the Asian markets and we'll probably see early on how this news will affect the U.S. markets. This could be the catalyst or trigger that I mentioned in last night's blog posting. If you are already in a put option trade, you might see a profit very soon. If you are still waiting for confirmation (like me), you might get your entry sometime tomorrow. I'll probably set up an initial trade contingent order tomorrow...possibly just below the 110 area on the SPY. If the futures are down in the morning, the SPY will probably gap down at the open. This tightening by the Fed should result in the dollar continuing it's uptrend (watch the UUP). This should also put pressure on commodity stocks like gold and oil. These sectors will most likely make moves down tomorrow. One more thing to consider...it is option expiration Friday tomorrow (February options). One thing that I have learned over the years is that expiration Fridays are the most irrational days of the year. The market will move up or down (or both) regardless of the trend...or wave count...or pattern. This makes these days very unpredictable. What causes this irrational trading behavior is the fact that there are decisions made on those days (expiration Fridays) that have nothing to do with expected future movements on the stock or market. These buy or sell decisions could be based on the sole fact that it is an expiration Friday and the future means nothing to the decision being made. This means that we shouldn't react too strongly to breaks of support or resistance if that break took place on an expiration Friday. I'm not using that as an excuse to ignore a possible break above the 50 day MA on the SPY, but rather a reason to possibly wait until Monday to see if that break was justified...assuming the market goes up tomorrow.