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After a 206-point gain, the Dow has now had triple digit moves in 4 of the last 5 trading days, 6 of the last 8 days, and 7 total in 12 days of trading in October. Now that a debt deal is done (although not official yet as I write this) and the government is going to fully reopen, is the volatility behind us?

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Bonds had a good day as well after backing off slowly during the lead up to the debt ceiling deadline. The I-fund lagged but we could see the overseas markets try to play catch up today.

The S&P 500 (SPY) is nearing the September highs again, and if it follows the lead of some of the other indices, it shouldn't have a problem breaking above that high. But once we see new highs, then what? Is it smooth sailing into the end of the year, or into the next CR and debt ceiling, which is just around the corner?


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Those open gaps on all of the major indices are still blatantly open and something we will likely deal with at some point. Again, we get to go through all of these budget debates again in a few short months.

The Nasdaq was able to push to a new 52-week high, and it looks like a very bullish chart. It has basically moved vertically since the low made 6-days ago so there could be some fatigue factoring in soon.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The small caps of the Russell 2000 also made a new high yesterday but there is some rising resistance that could get in the way.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Bond yields put in a negative outside day possibly reversing the recent upward trend for yields.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

I had opined that bonds would drop like a rock should the debt ceiling be reached, but since it looks like that will be averted, bonds rallied and the recent pullback may be finding support and ready for a bounce after rebounding off of the 50-day EMA yesterday.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Things look bullish whether or not we like it, believe it, or want it, but in the short-term it is possible that we are set up for a sell the news reaction. If that's the case, the dips will likely be bought until the technical picture deteriorates.

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Thanks for reading! We'll see you back here tomorrow.

Tom Crowley


Posted daily at TSP Talk Market Commentary

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