Fed decision and openness to more free money keeps stocks afloat

Plus: What happens to stocks if Romney wins… Be careful for what you wish for (below)

Helicopter Ben and the Federal Reserve came through with the bare minimum necessary for investors, continuing "Operation Twist". The best news from the announcement was their acknowledgement that the economy still sucks and that they stand ready to do more. Specifically, they cited slowing growth in employment and a slower pace of household spending, which is code for saying not enough people are spending money in the economy.

Slower spending is certainly not a surprise, as I have written extensively and is essentially what "Facing Goliath: How to Triumph in the Dangerous Market Ahead," is all about. The best statement that I saw was that the Fed acknowledged that inflation is declining, recently coming in at an "official" rate of 1.7%. Of course if you eat and drive, that's a joke. However, this is important because Bernanke has consistently said that the Fed may do a full QE3 and expand the Fed's balance sheet (print more free money) if inflation dropped below 2%. One likely scenario is that they are keeping their powder dry (when not if) Europe blows up again.

Investor Strategy

The lack of a significant new QE program implies that the summer is going to be ugly for growth stocks and especially commodities. Europe will likely explode again so traders can buy (EUO), (UUP), (EPV), (SH) and (BGZ). More aggressive traders can short commodities and metals such as Goldcorp. (GG), Barrick Gold Corp (ABX), SPDR Gold Shares (GLD), Power Shares Double Gold (DGP), Market Vectors Gold Miners ETF (GDX), Newmont Mining Corp. (NEM), , Freeport-McMoRan Copper & Gold Inc. (FCX), PowerShares DB Gold Double Long (ETN) for the not so faint of heart, plus Silver Wheaton Corp. (SLW) and ProShares Ultra Silver (AGQ) and Fortuna Silver Mines (FSM). And on the growth stock side, the S&P 500 (SPY), SPDR Select Sector Fund - Financial (XLF), iShares MSCI Emerging Index Fund (EEM), Emerging Markets Consumer ETF (ECON), Brazil (EWZ), PowerShares QQQ Trust, Series 1 ("QQQ"), iShares Russell 2000 (IWM) and iShares FTSE China 25 Index Fund (FXI). For the very nimble investor trader types, stay with the movers of Apple (AAPL), which will benefit from new products coming out in a few months as well other leading companies that will continue to ride the innovation wave like Google (GOOG), Intel Corporation (INTC), Qualcomm (QCOM), Microsoft (MSFT), Cisco Systems (CSCO), Dell (DELL), Caterpillar (CAT), General Electric (GE) and Yahoo (YHOO), Red Hat Inc. (RHT), Schlumberger (SLB) and VMware Inc. (VMW).

Keep your powder dry for better opportunities later this summer!

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.