The Fed's Kobayashi Maru

For the equity markets, the Fed faces a no win scenario today.

If it eases, it sends both a contradictory signal re Obama and Geithner and a message that things are worse than the US economic deceleration data suggest (see prior post below).

If it doesn't, then the fast money crowd (they are the market) will likely react rather dourly, throwing their usual temper tantrum when not getting their short term way*.

The accompanying chart** shows the key internal market indicators at their tipping points. Should the decline broaden out, it will most likely NOT lead to anything more than a pullback of modest proportions as there are virtually NO divergences (either internal or external) at this time (not to mention the fact that the Mega Trend is bullish).

A decline, however, will set the stage for such divergences to develop. The likely timeframe for clarity on this is 2 to 4 weeks.

P.S. With President Barack Tuvok Spock in the White House, is Captain Kirk at the Fed?

*Given their generally abysmal performance this year, many hedgies are on edge and will act rather dramatically to preserve what little gains they have.

**click image to enlarge