Is it Really as Simple as Don't Fight the Fed?

Mark Hanna at Market Montage raised an interesting question with a good chart to support the question which is it really as simple as don't fight the fed?  If you follow the chart below you can see when the Fed has been easing and the subsequent rise in the S&P 500 vs. the period when no Fed program was going on and the market dropped.  


Viewing the chart (courtesy of  Yardeni Research) it appears as though the S&P 500 could drop down to the 1000 to 1100 point level which would correspond to a 22.5%  to 29.5% decline from today's S&P 500 level of 1420.


It goes to show you a) the power of the Fed and b) how hooked on government credit Wall Street is weather it has an impact n the economy or not.  As Mark pointed out in his piece there are discussions surrounding this "sterilized bond buying" program by the Fed.  I have no idea of what this program may do but after the completion of Operation Twist and there is no other program to take its place we could be in for some choppy waters.