Now you know why we talk about the importance of the Fed ease. You
had to be in the financials before this. What rallies? Put simply: the
financials, the retailers and some of the autos. Tech could rally but it isn't
where the action is.



Three things happen after an ease:

1.Everything goes up.
2.The next day some of the stuff that has bad fundamentals goes back down.
3.The overall tape gets much better and much easier to navigate.

Let's take all three. First, because everything has gone up so much so fast, this is your chance to get out of
things that are doing poorly before we get into No. 2, where the fundamentals come back into play. Don't
sweat if you miss it, No. 2 will be more benign now that this ease has occurred. But I would sell losers right
now, and raise cash to put to work in beaten-down retailers, industrials and financials.

Remember that a lot of hedge funds are short the SPX and the QQQ (QQQ:Amex - news - boards). They
have to panic and cover because this changes the dynamic. That moves up everything. If you are in a
stock of a company that has disappointed, an Efficient (EFNT:Nasdaq - news - boards) or a AT&T (T:NYSE
- news - boards) or a Lucent (LU:NYSE - news - boards), I think you should lighten up and go for the better
plays. Take advantage of this rally and leave. But a stock like General Electric (GE:NYSE - news - boards)
or Citigroup (C:NYSE - news - boards) could have a multi-day move. Goldman Sachs (GS:NYSE - news -
boards) may be done going down. Period. Credit card stocks, brokers, savings and loans (Capital One
(COF:NYSE - news - boards), Merrill (MER:NYSE - news - boards), Schwab (SCH:NYSE - news - boards),
Washington Mutual (WM:NYSE - news - boards)) are going to go higher. Drugs and foods are harder. Now
that we know the Fed fears a recession, it won't let one get very deep and these stocks could do nothing
for a while. Financials. Financials. Financials. That's where to be.

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