Market gave up all the gains in last two weeks, which can be considered as a BULL trap and now in consolidation mode. Ongoing government shutdown and US debt ceiling debacle ahead of us is making investors jittery. Market seems to be in a holding pattern and taking "wait n watch" approach. What shall we expect in coming weeks!!! Not much has changed in below chart, BPNYA continues to remain above 70 while volatility ($VIX) is rising causing drag on the market. Expect more volatility ahead of us... NYSE is currently in consolidation mode right above MA(50), Can it hold current levels!!! On weekly NYSE chart, market continues to show divergence with MACD as well as RSI. Considering current scenario, government shutdown can get stretched till Oct 17th deadline to raise debt ceiling which could drag the market down further as volatility will rise. However, most likely some sort of agreement will be reached and it is very unlikely that US will go over the cliff and default on its debt obligations. Once an agreement is reached, market may get the necessary catalyst to rally into earnings season which shall be starting in a week or so. Before the rally, expect a shakeout just like the one we saw during Aug 2011.
What does it mean for our Investments?
Market in holding pattern, be cautious in this volatile environment... Comments are closed.
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