- Will The Rate Cut Help?

Market Summary
It was a roller-coaster ride for traders last week as volatility spiked to multi-year highs on the heels of a global market selloff. The timely decision by the Federal Reserve to cut interest rates by 75 basis points helped relieve the immediate selling pressure, but only time will tell whether this decision will be able to help prevent the economy from sliding into a recession. In our last report, we mentioned it would be extremely risky to bet on a bounce at this point, and we expect that this story will continue given last week's 2.2% drop in existing home sales. Thursday's disappointing figures put an end to the worst year for U.S. home prices in almost four decades.

As you can see from the charts below, the major indexes are all trading below the resistance of their respective long-term moving averages. We noted that market participants were not overly impressed with President Bush's $140 billion economic stimulus package and it will continue to be interesting to see if this plan will help give the economy the jump-start it needs to shrug off the weakness.