While last week contained a lot of disappointing economic news and a couple of negative forecasts on the economy from Cisco and JC Penney, the bearish tide still stems from the FOMC meeting. The fact that the Fed is not looking to increase the money supply has increased concerns over a deflationary spiral. We can see that fear played out in the drop of long-term yields and the sudden sharp rally in the Dollar Index. In a deflationary environment, cash is king. Investors are looking for preservation of capital, and a 2.6% yield on top of a government guarantee is seen as a good deal. A stronger dollar and deflationary fears are negative for equities in general, and more negative for commodity related stocks. The drop in Tech, Industrial, Financial, Basic Material, and Energy were the catalysts for the bears last week. The Dollar Index has seen a very sharp spike out of the two-month downtrend and is targeting its 10-week moving average at 84. That is also just about a 50% retracement. Technically, the summer rally trend was busted early in the week and the pressure was maintained throughout. Hardest hit has been the risk trade. While we should see some oversold bounces along the way, the trend is down and the target for a low is out in October. Therefore, rallies should be sold. The S & P does have some support between 1057 and 1069. Resistance is at 1100 and I would expect to see traders getting negative on anything over 1087. The bears are in control, even on light volume.