The S&P jumped yesterday but backed away from the highly psychological 800 level after the Fed announced a surprise injection of $300 Billion into a quantitative easing program.

The actual announcement of quantitative easing was not entirely unexpected since Bernanke has left the window open as an avenue of last resort since December. It was the amount of money being injected which caught investors off-guard.

The FX markets certainly took notice as the Dollar plunged against both the Euro and the Pound by extraordinary amounts. Additionally, we saw Gold fly, and naturally the U. S. Treasury futures experienced a huge pop. Sifting past all the headline data, we must ask ourselves what the Fed intended to achieve with such a decision.

With the markets locked into trends across the board, we believe Bernanke and company saw that the only way to shift markets into America's favor was to administer a giant monetary shock and hope key resistances were passed to override trends.

Looking at how FX and commodity markets reacted, the move clearly accomplished its intention. The U. S. is hoping to boost manufacturing and production by weakening the Dollar to provide a monetary incentive for countries to increase their U. S. imports.

Furthermore, the U. S. is appeasing China by dramatically boosting the price of Treasuries and showing America is committed to make U. S. debt a reliable investment for foreign countries. Though the S&P futures haven't committed to a 800+ future yet, the indicie's correlations sure have.

Therefore, it seems the Fed has accomplished its goal for the time being. Such a large shock will have considerable aftershocks for the near-term, and we should see continued volatility over the next few weeks. Pundits are warning the U. S. runs the risk of hyperinflation in the future, warranting interest rate hikes down the road.

However, this is a ways away, and we will have to see how the situation plays out over time. If the S&P futures can jump back over 800 we foresee clear sailing until the futures approach February highs. Fundamentally, we find resistance of 794.5 with additional resistances hanging at 804, 812.75, 818.75, and 829.

To the downside, we see support of 788.75 with additional supports sitting at782.5, 775, and 765.25. The S&P futures are currently trading at 793.50.