From the looks of it, the Bulls are once again running with full steam ahead on Wall Street, after 5 trading days of consecutive moves higher. This coming on the heels of a late night signing by President Obama of a temporary measure to end the 16 day government shutdown and lift the debt ceiling. After a morning where we saw some weakness across the broader markets, the E-mini S&P 500 future for December delivery now sits at 1722.00, up 9 points or .51% on the day, modestly applauding the news. While the December Gold contract is also experiencing a day of significant strength as it is currently trading at 1322.70, up 3.15% on the day.
However, in light of this exuberance, our desk continues to believe that it will be short lived. While some sense of clarity has been provided to the markets with the new "deal" that establishes a new deadline of December 13, the future dynamics around our nation's finances and its potential impact on the market is just as uncertain as it was a week ago. With that said, I tend to believe that we will finish out the week on a fairly quiet note and the markets will refocus their attention on both earnings and just what exactly this "deal" means for future market dynamics next week.
Therefore, our forecast for an extraordinarily volatile 4th quarter remains in play, as we have, once again, failed to provide the market with any long-term certainty. Like many times before, we have simply called a "time out" in the bickering between the two political parties, giving them an opportunity to re-catch their breaths after a month of non-stop debate.
So while the market seems to welcome the relief, understand that like DC the markets are simply catching their breath and will certainly be back to their jittery selves over the course of the next 2 months. Therefore, remain cautious and nimble with your trading plan as market direction could shift at a moments notice. This is not a market where you want to be caught being dogmatic with your views.
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