Hi folks. How was your Fed-meeting-minutes Wednesday? That's right - today was the day the details of the Federal Reserve's recent (March) meeting were released, and though there's usually some market tension heading into the official unveiling, there was a little more stress than usual surrounding the event today. Maybe that's because it was only Janet Yellen's second meeting as Fed chairperson and investors are still trying to figure her out. Or, maybe it was because traders were concerned she was actually serious about her seemingly-hawkish stance the last time she spoke on the status of the economy. More specifically, the last we heard, it sounded like the Federal Reserve was aiming to kill its QE efforts before the end of the year. Well, if you're reading this then you probably already know Yellen and the Fed aren't nearly as keen on raising interest rates as they may have seemed to be a month ago. As it turns out, even though the unemployment rate is getting closer to the committee's previously-stated target level of 6.5%, a bunch of other things have yet to fall into place. One of those criteria was and is inflation - there's not quite enough of it yet. In fact, after debating the issue for a bit, the committee decided to boot a hard unemployment-rate target altogether, and instead use the "we'll know it when we see it" approach. Needless to say, the market loved the notion that Janet Yellen is in no hurry to dial back the Fed's stimulus efforts. To heck with any long-term effects... like a weak U.S. dollar. You do realize, of course, that investors will have forgotten all about today's good news by tomorrow's trading, right? For that matter, the long-term impact of the Fed's action wasn't what was reflected in today's market action. Still, Wednesday's jolt did the market a huge short-term technical favor. Let's just start there. Moving Past a Key Milestone You know, the volume behind the move may not have been great, but the move itself was good enough to carry the S&P 500 back above its 20-day moving average line at 1863.6. That's all we really wanted to see. Well, actually it's not all we wanted to see. What we really want to see inorder to get all the way on the bullish bandwagon is a move back above 1883. That's going to take some time and work though, and we may even see a couple of setbacks as that thrust unfurls. For now, the fact that the bulls were willing to make a go of it for two days in a row is about all we could reasonably expect. Either way, it's good news, and a step in the right direction... even if we happen to temporarily slide back under the 1863 area later this week. I'd like to be able to say more than that, but honestly, that's the only thing worth pointing out about the chart. For what it's worth though, the Dow and the NASDAQ hammered out some equally bullish days today too, moving away from the brink of a big collapse. A Major Headwind is Coming Our Way While the analysis above hopefully had some value to you, just bear in mind that it's still just a short-term look at the market, based more on technicals and momentum and emotions than on fundamentals. As Benjamin Graham said it so accurately though, "In the short run, the market is a voting machine but in the long run it is a weighing machine." I was reminded of that key reality as I was reading today's edition of our sister publication, the Elite Opportunity newsletter. John Monroe always seems to have a knack for delivering messages right when they're needed, and today's edition was no different.... and that wasn't even the core of the SCN EO newsletter on Wednesday. The bulk of his point was to explain that while earnings may well be on the rise and projected to grow through 2015, the demise of the U.S. dollar has pretty much negated the real value of that earnings growth. Though he said a lot more than this, I think this snippet from today's edition of the Elite Opportunity gives you a decent taste of his point: The bottom line is I think with the recent drop of the dollar, along with P/E ratios climbing in recent quarters, the markets are in the process of adjusting themselves for the future right now because if the dollar continues lower and P/E ratios don't come down dramatically, this likely sets us up for potentially the biggest perfect storm we've ever seen and when I say storm, I don't mean a good one. Based on what I've mentioned here, it should be no surprise now why the Fed's bond buying activities are slated to come to an end in October or November of this year and although the markets got all freaked out about Yellen's testimony regarding when interest rates were likely to start rising again, there's absolutely no way corporate America can continue to drive attractive P/E's with a continuing falling of the dollar. At some point, the dollar needs to base and start moving higher, while corporate America continues to improve earnings. Well, we now know the Federal Reserve isn't quite as hurried to cut its QE efforts and/or start pushing rates higher as we may have thought a month ago. But, the flipside of that posturing is, if interest rates remain low and money is easy, the value of the U.S. dollar is not only going to remain pressured, but could even move lower. In fact, the chart of the U.S. dollar index looks like it's trying to break under a huge support line. Bottom line: Something's got to give somewhere at some point in time, and we can't help but wonder is stock's are going to make the needed adjustment by losing value to drop their P/E ratios back to the lower end of their norm. Yeah, it's a big can of worms... much bigger than we can really get into with one newsletter here. We didn't even really scratch the surface here. If you're really looking for some deeper insight into this headwind though (like when it might start to take a toll and how you're supposed to know when it starts in earnest), today's edition of the Elite Opportunity is a bit of an eye-opener. I'm willing to bet Monroe adds to his analysis in the near future too. Now would be a great time to use your free two-week trial to the SCN EO service, if only to check out today's edition in its entirety. Here's how to get that test drive, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Just a heads up for you guys....my goal is to get you a position update, an addition or two to the watchlist, and a closer examination of Q1's expected small cap earnings - by sector - by the end of the week. Amazingly enough, the sector-level earnings projections for the S&P 500's stocks looks considerably different than the S&P 600's constituents. We may be able to find an undiscovered bargain hiding in the disparity. So, stay tuned.