Friday October 04, 2013 08:38
The markets appear to believe that Washington’s insanity will lift in time to prevent the colossal “global” disaster that will result if the debt ceiling issue is not resolved. You can feel the pulse of the market as bravado generates the impulse spikes and conciliatory comments fuel the bears. We guessed right on the size of the range yesterday, at $15, but not the price points. The point was the word "guess." The raw emotion of this market creates snap trades, which do not define anything. If you’re convicted that this mess will resolve itself “efficiently,” shorting the trade appears appropriate. You may, however, see the market swoon much higher ahead of the resolution, especially if this draws out to the 11th hour. If you have a “high” risk tolerance, also be aware that in a raw market, support/resistance lines become less relevant. See this as a trade, with plenty of movement, once we know the news as opposed to trading the minute by minute rumors.