Hope that transpired last week expired over the weekend only to brought back in the Senate today. What is the deal nobody really knows for sure and to make it worse the, nobody at this point really cares. The bigger question is will Congress approve the deal? Regardless at this point, the bigger issues will the market correct without a deal? My view… they have until Thursday and we will just have to wait and see how it plays out from here.
Due to meetings and travel the next two days the updates will be posted later and the morning updates will be brief. The key is to let the uncertainty pass before committing to much capital on the long or short side of this move. I will keep you up to date on how and what we play relative to this move.
State of the Market:
The major indexes opened lower and bounced back on hope yet again! We closed higher on the S&P 500 index by nearly 7 points or 0.4%. The negative sentiment coming into the day was more than I would care to deal with, but now we still have to find a solution or the downside will return.
Let’s start with the DOW, moved up 64 points on the day and holding above the previous support at the 15,100 level and the uptrend line. It is still anyone’s guess at this point considering no solution from the government on the budget. The move gives plenty of room for the move relative to a test of support and the outlook.
The NASDAQ tested the previous high at 3817 and ready to move higher. The test of the 50 DMA seems a long time ago, but it was just four days. The index remains the strength of the broad indexes. The large cap stocks remain the positive part of the bounce back. Still have to be cautious about the current move until what time the deal is done and we can turn our attention to the earnings. If the wrong thing is said overnight we can easily give back the gains forged over the last week.
Looking at our sector rotation chart the sectors all continue to move in unison and essentially to the same point. That does not validate any leadership, but it does show a joint effort to drive the markets higher in response to news. Patience is the key and we will take it one day at a time.
What to Watch Tomorrow:
The simple point is to see how the Senate bill will be received or rejected. The results or outcome will determine the direction short term. Don’t jump to any conclusions based on the news. I will update this further in the morning further in the daily trading update. As always there is plenty to watch and trends to follow. Keep you eyes open, your ears tuned and your stops in place.