It appears Wall Street will once again force action upon Washington DC with stocks falling today. Sellers were able to reign in buyers just after the surge from the morning session. Accelerating into the close sellers slammed stocks to their lows of the session taking out Friday’s low. The action isn’t what we would like to see out of the market for an uptrend and now the Dow Jones Industrial Average is near taking out its August lows. CNBC has stepped up its campaign of fear mongering over the debt ceiling in hopes to bring up viewership from 20 year lows. Nothing like a good crisis to sell ad space, but will viewers return? The close was certainly disappointing and given the pile up of distribution this market uptrend is under heavy pressure. Fears are up with the VIX jumping above 19 today and given the price action we are certainly in caution mode. Bulls have serious work to do to save this market uptrend.
Leadership remains okay and it is something we are keeping a close eye on. This doesn’t mean we can’t head lower here, because we can. Trend followers obey price and when there is a signal to enter or exit we obey it. The market could care less about our opinions on the Affordable Care Act and how it will affect the economy and the stock market. Therefore, our opinions aren’t part of our process. The key is the ability to hang in there and stick with the process. Emotions can easily allow you to stray from your process and devastate your results. Stick with the plan.
The sentiment certainly says we’ll get a gigantic boost from a deal to open the government and raise the debt ceiling. It should plausible, but many thought we would continue to hit new highs with a “No Taper” decision from the Federal Reserve. Anything and everything will happen at some point and trying to pin point the outcome is quite silly. We aren’t in terrible shape and we aren’t in the best shape and we’ll adjust accordingly.
Adding additional anxiety for non-trend followers will be earnings season. NKE really kicked it off, but AA is the official company to kick off the 3rd quarter earnings season. It will be interesting to see the effect QE has had on the economy and earnings. Stick with the plan. Ride your winners.
