We continue to see this market digesting every single headline coming out from Washington. It appeared earlier today the market was about to rocket to new highs, but sellers jumped all over the chance to sell this market down. By the end of the session we still didn’t have a deal and the market lower. Many will point to Washington, but we’ll ignore the noise and follow price. Somewhat concerning is the pick up in volume up near these highs and while the Russell is at new highs we aren’t seeing SPX confirming. The NASDAQ has confirmed, but the new high was on light volume. Whether or not we are churning will be confirmed if this market turns lower. For now, we are still looking at higher prices until otherwise confirmed. For now it appears we’ll sit tight until we get a deal or we default.
The lone bit of economic news today was the Empire Manufacturing index. At this point these economic data points are largely ignored, but the Empire figure disappointed given the estimates. At least it was a positive figure! Until the government is reopened we’ll get a flood of economic news and market pundits drooling over the chance to over analyze the figure. Tomorrow we’ll get a read on how optimistic home builders are with the NAHB Housing Market Index. At least we have the US Default risk and government shut down to keep the financial media happy.
This market is just waiting for Thursday or a deal to be announced to have a big move one way or another. We have come a long way from last week’s low and we are just below new highs. The best course of action is remaining with the plan. When our Trend Following signals tell us to sell we’ll sell. We can not predict the future with any confidence, but we can follow a proven system. We have the utmost confidence in our system and it works. Guessing the market will go higher is not a sound system nor is trying to pick every turn in the market. Stick with what works.
The fireworks are just getting started. We have two trading sessions until the potential of default. What happens after will determine how we react. Stay tuned.
