Shall we just repeat what was said yesterday and the day before and the day before than? Sure! The Senate punted and now it is back in Congress to come up with a plan. The power of communication is staggering. Where do we go from here is the bigger question mark? As we stated yesterday the challenge is to remain patient and let this all unfold. Once we know there is something in writing the markets can move forward, and not until. The choppy trading day follow the news from the Senate and Congress on what progress was being made relative to the budget. We moved higher early in the trading day and then sold into the close with the Dow off 0.87% and the S&P down 0.7% on the trading day.
State of the Market:
The S&P 500 index is at 1698 and still above 1690 support. I like the upside if we get a solution to the budget impasse, but the downside risk is still high as we creep towards the Thursday deadline. The NASDAQ held above the 3788 level and is still the leader among the major indexes. The Dow was back to the leader on the downside as it moved to the 50 DMA, but held above the 15,100 support level. Tomorrow is another day and we will see how it plays out.
What to Watch Tomorrow:
What else is there? The House and Senate have to make a decision and until then we need to do what is important… protect our principle. Tomorrow we will cover the outcome of the next stage of the budget debate, assuming there is one. It is not worth speculating on what the possible outcome could be if this or that happens. Thus, keeping my comments short and to the point. Keep your stops in place and you cash in place for now.
Chart to Watch:
The chart below is the S&P 500 Index. The key support levels are drawn and we will look at how this progresses and what leadership takes control moving forward.