Expectations continue to remain low, which keeps the stock market with an underlying bullish bias.
Over the past two months the US stock market has been hovering near its all time highs with few attempts at pullbacks only to pop back towards the recently set new highs. This type of market action on a chart clearly shows us consolidation. With any type of market consolidation we should expect it to come to a point and break out into a new trend.
Within hours of the United States Government shutting down, the stock market even in the face of this real fear has only shed fractions. This muted market reaction is common with any Low Expectation environment as bad news is expected while any bit of positive news is applauded.
The government shut down could become the springboard to pushing the market through its recent high. Although a shutdown may occur it is likely some sort of deal will be made and once this happens it the stock market could pop through its recent highs.
As discussed in previous Market Expectation letters; markets have been moving mostly on artificial means making any stock market action extremely volatile. Any participation in these recent and coming stock market moves should be tapered to meet ones risk appetite considering this volatile time in history.
The above and below represents the opinion of the author and do not constitute a recommendation to buy or sell any financial products.
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