"The Fed lowered interest rates more than expected and in a way that has Wall Street talking; in fact, the stock market is setting up a potentially bullish technical formation," technician Mark Leibovit, editor of Volume Reversal Survey -- often ranked among the top performing market timing services.

He reports, "The market expected a 50 basis point cut to 0.5% with a chance of a 75 bp cut to 0.25%. Some even called for a rate of 0%. The Fed made a lot of people happy, though a bit confused, by lowered the Fed Funds rate target to a range of 0% to 0.25%.

"This is the first time the Fed has lowered rates to a range instead of a an actual number. It also bring the Fed Funds rate to its lowest target rate ever. The Fed also pledged to use "all available tools" to combat a severe financial crisis and prolonged recession. The stock market likes the lower interest rate and the Dow is up 360 points, the S&P is up 44 and the NASDAQ is up 81.

"As I write, all nine market sectors are trading higher, led by Financials which are up 9.8%. Goldman Sachs (NYSE: GS) is up 17.2% after reporting its first quarterly loss as a public company.

There are a few developments that gladden the heart of nearly every business executive. Rising retail sales. Rising real incomes. Sustained job growth and household formation. And lower interest rates from the Fed.

U.S. business executives, investors, and typical citizens alike may have to wait awhile for a constructive dynamic to emerge regarding the first four, but there may be some good news regarding interest rates. We're headed back down to 1.5% - - or perhaps even lower - - regarding the Federal Funds rate, so says economist David H. Wang.

Further, Wang believes an interest easing is up ahead, even though that stance would seem to fly in the face of the Dow's recent rise/signs of life, and a July U.S. consumer price statistic of 0.8%, that indicated that inflation rose at its fastest pace in 17 years.

"The July inflation number was high, but the core inflation gain of 0.3% means the U.S. Federal Reserve has some breathing room on inflation, some leeway to cut interest rates, and they're going to need it," Wang said. Wang sees the Federal Funds rate, currently at 2%, falling to 1.5% by January 2009.

Bearish on U.S. stocks, economy through early 2009

As one might sense, Wang is not bullish on the U.S. stock market or U.S. economy over the next six to nine months. Here's why: "First, the U.S. housing market has not reached a bottom. We're not even close," Wang said. "People are watching the U.S. median home price [currently about $206,500], when what they need to scrutinize is inventory levels. We're still at nine-month and ten-month inventories levels in most regions, and a healthy market has only a three-four month inventory level. So don't look for any economic stimulus from the housing sector."

Well, all I can say is that today has been one of the worst days of my portfolio's life. I'm not concerned about my core holdings -- Disney (NYSE: DIS), Coca-Cola (NYSE: KO), General Electric (NYSE: GE), stuff like that -- but, boy oh boy, are my financial positions taking some major hits!

I know, I know -- you're saying to yourself, "uh, buddy, didn't you realize this was going to happen?" Sure, but when the theory becomes reality, that's when the torture really starts to set in. Not sure if you caught the wave of downgrades today -- if you didn't, check out Eric Buscemi's post about it -- but I got hammered by one of them. MFA Mortgage (NYSE: MFA) was downgraded by Keefe Bruyette on book-value concerns. As I write this, it's trading down over 15% -- oooh, it hurts to write such a double-digit figure -- on, get this, volume of over 15 million shares. The 30-day average volume is closer to 4 million shares. I'm writing this with a couple hours to go to close! It's going to be a huge volume day once all is said and done. I also own Newcastle Investment (NYSE: NCT), CapitalSource (NYSE: CSE) and MFA preferred shares (NYSE: MFA-A).

Have I been shaken out yet? No. In fact, in terms of MFA, I personally think that it is a buy, even though it could be in falling-knife mode right now (that's always difficult to discern). I know Timothy Sykes would disagree on this strategy, so you should check out his post for some balance. With Ben Bernanke most likely set to cut the Fed Funds rate even further, MFA should benefit, as should most financials. I also like CapitalSource, but I am a little wary at this point of Newcastle -- I think it will recover, but that one's been particularly volatile. As they say, when there's blood on Wall Street, that's sometimes the best time to do some judicious buying (after a ton of due diligence, of course). And, as a postscript, if you want to do only safe buying, then Disney, Coke and GE might be good ideas to look at -- GE has an especially interesting yield right now.

Disclosure: Steven Mallas owns shares in Disney, Coca-Cola, MFA common and MFA preferred, CapitalSource, Newcastle Investment, and GE. Positions can change at any time.