October 13, 2013
Weekly Market Outlook
By Mish Schneider
When the government’s actions or antics are loud enough to either sink or elevate the markets you should use the opportunity to look for a good market top or bottom to trade. However, don’t wait for the news to be your catalyst, the market’s internals, volume and price action will tell you when to act.
Last week, after another multi-week decline on concern over the effects of the government gridlock, the market rallied sharply off of key support levels and the media accredited the rally to optimism about the possibility of diplomatic progress that might lead to a compromise which could result in an agreement to re-open the government and increase the debt ceiling for a few weeks so both Republicans and Democrats could come to a more meaningful agreement before a new deadline which would be in the near future.
That doesn’t sound like much of a resolution of the problem that was ailing the markets to me. Yet the markets rejoiced with the biggest 2-day rally in months. Traders who were looking at the market action and internals should not have been surprised by the market’s move higher.
Watch this week's video to see why the market really bounced.
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