Sometimes cliches are cliches for a reason - they are quite accurate. Often it is said the market will frustrate the majority of those participating and this week is a prime example. Scanning various blogs and tweets on the internets (sic), very few wanted to be short ahead of a knee jerk explosion upward on debt ceiling resolution. That doesn't necessarily mean they were all heavy long, but certainly you don't want a host of index puts to instantly go to zero, and/or that double (or triple!) levered ETF to blow up in your face. So what does the market do this week as everyone stands to the side with itchy finger ready to 'buy buy buy' once Reuters leaks a deal? It has its worst week in over a year. Typical!
As I said early this week, the moving average and technical level don't quite mean so much when we are so headline oriented but we are now getting oversold and nearing key support. About 10 S&P points away from the 200 day moving average on the exponentials.
If this market remains weak all day, I'd expect some sort of rally in the closing moments - if for nothing else - shorts covering fearful for the debt ceiling deal over the weekend that sends S&P futures up 2% Monday morning. Doesn't mean it will happen, but it remains a big risk for anyone holding overnight.
Deal or no deal the economy remains pitiful for those not in the top 20%, and especially 2%.
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