Loading ...The market started off last week being bid higher on news that Larry Summers declined to be selected as the next Fed Chairman. This news combined with the Syria peaceful resolution exchanged by Putin enabled the market to start the week with optimism. Soon after the market opened, traders across the nation stopped trading and focused on the tragic news of a mass shooting at the Washington Navy Yards.
On Tuesday, the market positioned itself slightly higher ahead of “the big day”. Trading volume was non-existent and after a slight move higher in the morning, the market stagnated to the end of the day. The light volume reflected trader’s uncertainty ahead of Wednesday’s highly-anticipated announcement from the FOMC
Wednesday was a big day, a game changer! The Fed shocked the nation by confessing that it could not even begin to end QE and that interest rates would remain low. The machines propelled the market in milliseconds higher and by the time the news had reached California, it was too late for traders to price in the news (machine wins). The news itself however was not what made Wednesday a game changer. The Fed had indicated that they were going to taper (at least that’s what the market understood) and then they went back on their word. We were once again reminded that; one, the Fed lies and two, the game is rigged.
On Thursday the market reversed and ended the day lower (except NASDAQ). The enthusiasm driving by the Feds decision to not taper was replaced by the realization that the Fed sometimes lies. The market was left wondering if Ben Bernanke has started a trend, purposely deceiving the markets. The answer to that question came sooner than expected when on Thursday India’s Raghuram Rajan hiked the interest rates to 7.5%, again shocking the markets.
The week ended on a quadruple witching day and renewed fears of a government shutdown. The House of Representatives passed a continuing resolution bill to fund the government through December 15, but with a provision to defund Obamacare. Clearly Obama is not going to support this resolution bill and the bill will most likely be voted down in the Senate. As a result, the market sold off throughout the day and ended the day on a down note (but 1.5% higher from Monday).
Today, the market is poised to open higher. The dollar weakening, Fed QE, and interest rates low are continuing to elevate the market. At the same time, a reversal can (and probably will) happen when news in regards to Syria or government shutdown steals the headlines.
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