Is it ok to buy stocks yet?

Ok. From the market's action in the last couple of days, I think we've finally hit at least a temporary "safe" spot. Here are the pros and cons:

1. The fed cut rates by less than the expected full point today (3/4 point) and still the market managed a huge rally. Although I'm not so sure how the 1/4 point cut on Sunday night plays into this. The market still managed a nice rally, and more importantly, the Yen came back to 100 yen/dollar. The dollar had recently fetched 96 yen, and even with the fed rate cut, the fact that the dollar rallied shows that we most likely overreacted to everything.
2. Yesterday we had probably the most disturbing news to date, which was the buyout of BSC for $2 by JPM. Still we managed to rally from the depths. If this couldn't bring the market down below support, what can?

Cons:
1. The PPI report was terrible today - it basically showed large increases in producer prices, while the CPI was flat last week. This MIGHT predict a general corporate margin squeeze.
2. This is STILL a fed rate cut induced rally, and as we've seen before, none of these rallies have sustained themselves in the last 8 months (although they have been quite powerful), we still managed to go lower. Will this one be any different, or will we head lower again in a couple of weeks? It remains very likely that we'll continue to hear more bad news every week, whether it be about real estate, banks having liquidity issues, etc. I'd like to see us rally on something NOT Fed related for a change.

With this, I have to hand it to the Fed. Although we like to bash them for any decision they make, they have taken quite an aggressive approach to dealing with our current credit crisis. This is in contrast to the Bank of Japan back in the 90's, when they underwent a similar, but far worse situation. The Bank of Japan pretty much sat on their hands while everything went downhill. We have an active Fed, and whether or not this will make a difference during this cycle will most likely become a solid lesson in macroeconomic management for many nations.

Overall, I don't expect us to move straight up from here, but it's possible that we might finally be able to buy on the dips for a little while. It will be important to see if we can hold another large rally tomorrow, or at least consolidate our gains and not lose ground. Keep an eye on those newswires!

Oh and on a side note - BIDU and many other China related names have most likely suffered relative weakness due to the recent unrest in Tibet. Tonight there was a resolution to the protest (protesters surrendered for leniency) so keep an eye on BIDU and the FXI.