The kids being the children that run this country and pretend to care about what’s good for the average person out there. Over the weekend, those children stood toe to toe and pretty much said, it’s your fault. No, it’s your fault. No, it’s your fault. Well then, I’m taking my glove and going home. Nah, nah. Then they probably stuck out their tongues and laughed as they left. That’ll show them!!! The market didn’t like the games the children were playing as the country is on the precipice of a major debt default and downgrade of its debt that’ll have ramifications for a long time to come, mostly at the expense of the American public.
The futures last night down near 200 points with fair value on the Dow. Not pretty, and that was early on. The market could have gotten a lot worse overnight, but managed to hold near a 100-point loss as we came towards daybreak. The market trying to be hopeful on some level that the children will get some real supervision and force them to do what’s right for the people of this country. There’s a lot of empty space between the ears, so I personally wonder, but the market is trying to be hopeful on some level, and I offer praise for that, although it may be more fantasy than reality. It’s sure starting to look that way sadly.
When the market finally opened we did gap down, and as the day progressed, no good news came out other than some agreements on some of the ingredients but nothing major. A sad time for the politicians of this amazing country, and an even sadder time for those who are being adversely affected by it all.
The market did gap down hard, but found a way to work its way back to near flat as the day wore on before selling off again once we got near S&P 500 1345, the big gap of resistance we won’t get through without some very good news from our economic leaders. There were some negative headlines that came out around 2:45 PM eastern time from Boehner once again as he proudly stated he will not budge on things. Good for you Superman!
The market didn’t like it, and reversed from almost green on the Nasdaq to back down some. Once again not moving down too hard as once again the market is trying the hope theme. In the end, not a good day for the markets, but not a terrible one either with lots of risk out there still remaining. The bulls can feel good we didn’t crash out but they shouldn’t feel too good as a market crash or something at least very bad could occur if the package isn’t done correctly for the rating agencies. They won’t hesitate to downgrade our debt so buyer beware for now.
The market is trading in between strong support at 1330, a gap just taken out by the bulls, and 1345, a massive gap the bulls have yet to take out. A small 1.1% range for the short-term. If we can take out 1345 with a bit of force, then we can try to make a move up to 1356, and then 1370, the old highs. If we lose 1330, then 1315 is on the table, and ultimately 1300. The news of the day is more helpful to the bullish case thus far.
Bad news is not killing things down as we thought would happen last night. 1330 S&P 500 is finding a way to hold for now. The first bit of good news it seems will allow us to break through that resistance at 1345. Don’t forget that the wrong news, and it’s out there, can take us down very fast and very hard, so yes, it seems the market wants to take out 1345 before it loses 1330, but you can’t call it a slam dunk by any means.
Once again the banks and the financial stocks couldn’t get out of their way today. The semiconductors weren’t great as usual either. However, the news was such that the financials/banks could have gotten hit much harder than they did. Last night, when the futures were basically -200 on the Dow, I envisioned the financials getting taken out on a stretcher today. It didn’t happen. A small move lower, but nothing to get excited about if you’re a bear waiting for a financial catastrophe.
The semiconductor stocks also are still weak in their pattern, but the pattern is improving. The short-term charts didn’t look great, thus, some selling there today but after hours, Broadcom Corp. (BRCM) knocked the cover off the ball although Texas Instruments Inc. (TXN) struggled some on their report. If Texas Instruments can recover, and we don’t gap down on bad news overnight, the semiconductors should perform well tomorrow. A big if, but it is set up for higher if the right mix occurs.
The market is as uncertain as I’ve seen it in many years due to the political effect currently in place. I hate it when technicals to some degree get trumped by outside politics. No one likes this as it’s tough to have faith in anything you do as a trader either way. News keeps coming out all day long and the market moves on it. For now, some exposure long seems best based on current market behavior, but you have to be prepared for anything to hit at any time, thus, extreme caution is warranted.
Peace,
Jack
