Stocks did indeed spike lower this morning as investors reacted to the surprise move by the Federal Reserve last night but the weakness was short lived. Traders bought the dip and stocks are back in positive territory. The U.S. market is on track to post gains every day this week. The S&P 500 index is currently pushing past technical resistance at its 50-dma near 1,108. The dollar's strength pushed commodities lower overnight but we're not seeing much of an impact today. Crude oil is actually up 50 cents near $79.50 a barrel. Gold futures are down about 50 cents around $1,118 an ounce.

It was an ugly day in Asia. The Chinese Shanghai market is still closed but the NIKKEI and the Hang Seng saw painful declines. Investor reaction to the Fed's move sent stocks lower. Initially the dollar strength helped Japanese exporters but the rally ran out of steam. Shares of Toyota continue to weigh on the Japanese market. The NIKKEI index lost more than 2% snapping a three-day winning streak.

Meanwhile the Hong Kong Hang Seng lost 2.59%. Short-selling activity surged as investors expect the Chinese market to drop next week. You may remember that on February 12th after the market closed the Chinese government raised the reserve requirements for banks for the second time this year. The Chinese markets have been closed all week for holiday so they have not had a chance to react to this move yet.

The weakness in Asia and the Fed news also sent stocks lower in Europe with most of the major averages gapping lower. Yet traders bought the dip here. All of the major markets rebounded into positive territory. The English FTSE is up five days in a row with today's 0.6% gain. The German DAX rose 0.7%. The French CAC-40 surged 1.1%. Europe could be the focus again next week. A Wall Street Journal article today said Greece was planning a new bond offering soon. The troubled country wants to sell 5 billion euros worth of 10-year notes (that's about $6.8 billion). Investor reaction to the bond auction could have huge implications. If the auction goes well it could help soothe concerns over a debt default. If the auction doesn't go well it will pour salt on the wound and probably send the euro lower.

In the U.S. the big news was the surprise move by the Fed last night to raise the discount rate, which is the rate they charge banks for emergency loans. The discount window hasn't seen a lot of action lately so the move was largely symbolic. The problem is that for many this is a sign that the Fed's next move will be raising interest rates. Fortunately the CPI data out this morning eased those concerns. Hmm... do you think that the Fed got an early look at the CPI data before the rest of us?

There seems to be a disconnect somewhere between wholesale inflation and consumer inflation. The PPI data this week saw wholesale inflation rising. Yet the Labor Department said the consumer price index rose 0.2% in February, which was less than expected. If you exclude the more volatile food and energy prices the "core" CPI rate actually fell 0.1%. This was the first monthly decline in the CPI in 27 years. You have to go back to December 1982. This was welcome news for the Fed since it gives them plenty of breathing room. The main reason to raise interest rates is to fight inflation and currently there is no inflation to be found!

In other news the Mortgage Bankers Association said that foreclosures and homeowners at risk of foreclosure in the fourth quarter of 2009 remain at all-time highs. Yet the rate of new delinquencies was slowing down, which was a positive sign.

Currently the S&P 500 index is up 0.38% near 1,111, which is technically a breakout above its 50-dma. The NASDAQ composite is up 0.23% at 2,247. The Dow Industrials are up 0.28% at 10,422. The Russell 2000 index is up 0.4% near 632. The Russell is up nearly eight days in a row. It might be time for a little correction. The worst performers today are the healthcare stocks (-0.7%). The best performers are oil services (+1.7%), casinos (+1.5%), railroads (+1.6%) and the BKX bank index is up 1.3%.

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

A quick scan of the play list reveals that FCX has hit our second and final target at $77.25. Shares of X are performing well with a 4.5% gain and a move over its 50-dma.