This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Bulls are Applauding Congress

On a day when our morning cup of coffee and favorite media network is inundated with the "doom and gloom" of the ever present government shutdown (the first in 17 years), we find the broader market up modestly on the day. Currently, at the noon hour on the east coast, we have the December E-mini S&P 500 contract up .85% trading at 1688.50. With the December NASDAQ E-mini contract up over 1% trading at 3243. Additionally, the CBOE Volatility index (VIX), hitting a three-month high of 17.49 yesterday, is down over 5.5% trading at 15.66.

So what does this positive reaction by the broader markets say? It says the markets have essentially ignored the "doom and gloom" that media outlets and pundits around the country are preaching this morning. Which leads me to the question of the day, "Why are the markets up on a day when everyone would expect them to be down?"

If you have been watching the markets, particularly the equity index markets, over the course of the past five years, the answer should be readily apparent to you. The "Bulls" of the market are actually applauding the actions of Congress! Why? Because over the course of the past five years, this market's upward momentum has been fueled by the easy money policies of an overly accommodative Federal Reserve. Thus, with the grandstanding that we are seeing on Capitol Hill around the federal budget, the end result is increased uncertainty for the economy along with the potential negative impact on growth, which makes it ever more unlikely that the Fed is going to waver from its easy money course anytime soon. Certainly not before they receive some clarity on the direct impact that the government shutdown and the pending debt ceiling debate has on the overall economy.

So what does that mean for the trader? I tend to believe it means that the broader market still has plenty of room to run to the upside. With that said, in the near term, we could certainly test that 1670 level in the S&P, especially with the uncertainty around the upcoming debt ceiling talks. However, these issues on Capitol Hill will in the end work themselves out, as they always do. Therefore I continue to be a buyer on weakness, as I think the easy money policies of the Fed will once again prevail as the focal point for investors and could have the S&P easily testing the 1725 level seen two weeks ago.

So if you hear the faint sound of clapping in the background, it is likely the "Bulls" showing their appreciation for a Congress that is inadvertently securing more easy money times to come.

Travis McGhee

CEO, FuturesANIMAL

OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits

FuturesANIMAL can be followed on Twitter at twitter.com/ FuturesANIMAL

Travis can be followed on Twitter at twitter.com/Travis_McGhee

At the time of publication, Travis McGhee held positions in SPY.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
SPY $211.99 0.63%
TLT $126.87 -1.86%
AAPL $129.09 0.49%
FB $79.75 0.99%
GOOG $571.34 2.32%

Markets

DOW 18,288.63 +155.93 0.86%
S&P 500 2,117.39 +12.89 0.61%
NASDAQ 5,008.0960 +44.5690 0.90%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters