If you liked the rally today, you're going to really like the rally to come when the Fed temporarily stops raising rates. As I had mentioned in the newsletter, that day is coming, but like I said, I feel it will only be temporary. The only problem is we may not get the offical word until August. If that's the case, we are in store for more of the same. Once we get the official word however, we will probably get a rally that will carry us into December.

We should get a real nice rally in the cyclical stocks as witnessed by the move in home improvement giant Lowes (Low) today. Tomorrow, Home Depot (HD)and Hewlett Packard (HPQ) will report. I do feel the rally in the cyclicals will be our final opportunity to reduce our exposure to the sector. Once the Fed resumes raising rates after its pause, it will be "bombs away" in the group.

The reason I think the Fed will pause is primarily due to the inflation drivers in the economy. Commodity and Raw material prices are pulling back, and they have been the big culprets in the inflation numbers. Oil prices dipped below $48/bbl and the dollar is showing new life after hitting a 7 month high against the euro. We do not have to wait for an official governmental report to be released to take action, we can see what is happening right before our eyes.