It appears Washington wants a Hollywood ending and is willing to let the drama play out until Thursday night’s official/ unofficial deadline for the zombies to come to an agreement over the debt ceiling while attempting to reopen the government. We typed politics until we were blue in the fingers over the weekend and hopefully by the end of the week we can focus more on the market and the current earnings season and less on what the knuckleheads are doing to destroy the country.
The latest news on the zombie front is that there will be a meeting today at 3pm with a possible deal reached later this evening. Wall Street will be keeping its fingers crossed while we wait for clue to go long or short.
We often talk about history and trends and we said this week could be historic given how the chain of events are unfolding. It is easy to attach a headline to why the market moved up or down but foreshadowing on where the market is headed is always where the money is made. To be successful, you have to know where the trend is going to be before it develops and you have to learn to survive trading ranges.
Despite the recent volatility, we have talked about how the indexes have been in a 4-week trading range with the upside and downside being stretched. Last week the bears took a stab at cracking support with the prior week seeing the Nasdaq and Russell 2000 soaring to new highs. As we get into this week, there are a number of blue-chips and Tech stocks that will move the Dow and Nasdaq and Friday also marks the expiration of October options. It is also the week the Dow experienced its biggest one-day drop ever of 22.6% (508 points back then to end at 1,728) and what would become known as Black Monday.
The bulls don’t seem too worried about headline risk as they are once again pricing in a possible deal. Following a weak open, the indexes are fighting back and are mixed with Tech and the small-caps turning positive as we head to press.
The Dow is down 28 points to 15,209 while the S&P 500 is lower by 3 points to 1,700. The Nasdaq is up 2 points to 3,794 while the Russell 2000 is higher by a point to 1,085.
We have a lot to cover today, including a NEW TRADE so let’s get on it. Subscribers, check the Members Area for the updates.
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