A day of indecision and mixed prices followed in the markets after yesterday's rate cut by the Fed. While to US dollar spent most of the day on the plus side, it was a feeble plus (near 76.60) that was held in check by poor economic statistics hitting the wires once again. Crude oil came off its stratospheric levels, but only by about $2.00 per barrel. Stocks, on the other hand, took a drubbing, losing over 215-points and they stayed down through gold's close. Margin call sales in the wake of a larger decline in equities could still spill over to the metals.

The precious metal looked set to test lower support areas between $775-$780 but the selling subsided near $783 as the ISM factory index showed that manufacturing activity came close to stalling out on the heels of the spreading housing slump. Demand fell for construction equipment, furniture and appliances. Consumer spending also showed signs of weakness. This, just after the GDP and employment data suggested a different direction just hours ago.

Spot gold closed in New York nowhere near the $800 figure achieved in after-hours trading, and the market settled at $790.20 bid, down an insignificant $1.50 per ounce. The only significant fact for the day is that the market is not looking back at the shorts from some higher levels such as $805 or $810 the day after the rate stimulus.

The realization that the Fed has basically given the markets as much as it is inclined to give for the foreseeable future, had the holders of many a profitable position in gold, oil, and other assets thinking about leaving good enough alone and taking a stack or two of chips off the table. Fewer player wanted to leave their pig masks on, after the trick and treating had concluded.

The metal remains quite vulnerable to a correction of about half of the more than $100 move it traced since the initial Fed cut. These mild dips keep the bulls on the boil however, and they should not be discounted. The only remaining problem after a higher spike (if it comes) will be the magnitude of the eventual correction. Silver dropped 14 cents to $14.23 on recession fears and platinum was quoted at $1444.00 per ounce.

The Fed indicated that it was accommodative one more time, basically only because of what it saw going on in the housing sector. Let's just call it a depression. One out of every 88 households went into foreclosure in California during the third quarter. Perhaps if so many households had chosen not to go into contract in previous years when the freewheeling attitudes were the order of the day, we might be in better shape today. However, the sense of entitlement to a McMansion complete with a Land Rover outside for everyone was too powerful. Now the price is being paid for those excesses.

The unpleasant prospect of over 2 million homeowners losing their mini palaces looms large. This latest quarter-point adjustment is still being seen as an attempt to also placate the big boys in lower Manhattan and shield them from the effects of the bad decisions they made. Now, the Fed will have to try to shield itself from the decisions it made in the past two months. Sure enough, the specter of inflation was being raised in the language of the communique that followed the rate cut. Yes, inflation that will be caused by the very act of cutting the rates. Nice touch.

Remain on continued alert for profit-takers triggering small slides which could snowball, while the self-fulfilling prophecy crowd tries to push back towards the $800+ figures. Geopolitics have suddenly fallen off the radar for participants. The intense focus was on the Fed. Next week may tell more clearly just who has the upper hand in the post-Fed decision environment.