Tuesday October 01, 2013 08:54
Enough said about the government shutdown. The metals dropped from our $1,337 resistance level to $1,285, capturing our $50 move, suggested on Friday. The market has been displaying weak conviction over the past few days, with the government showdown failing to spur new buying. Now, the argument should have been that the event of a shutdown will at best slow the economy, have a negative impact on employment and continue to auger for the Fed to be forced to remain accommodative. A solid argument if you believed the Fed was looking to taper, but we suggested that this event is most likely a 2014 scenario. The event that will have the desired impact for the bulls is now 17 days away, when the fight draws to a climax on the debt ceiling negotiations. If they blow this one, the work accomplished over the past few years will be for naught. The momentum and technicals continue to look weak, but extreme caution is advised for traders that blindly short the trade. Suggest initial support at $1,287 and then $1,272, with a bullish entry on a move above $1,307.