Congress Moving Markets
Posted on Friday, September 27th, 2013
Budget fight is weighing on the market although not as heavily as one would think. The Dow was down over 100 points early this morning but it seems to be more of a buyer’s strike then large institutional selling. Most managers have their portfolios positioned for the end of the quarter and are just battening down the hatches as Congress does what Congress does. The market is anticipating a last minute deal from Congress so there is no real panic in the air. Light volume and keeping the wallet secured is the order of the day. There are only two trading days left in the quarter and no one wants to screw it up.
Something else weighing on the market is the specter of lighter guidance from corporations going forward. This morning Accenture took down their guidance for the next fiscal year. We think that equities may have gotten a bit ahead of themselves (with Fed help) and the current economic environment could be challenging considering current above average equity valuations. Could Accenture be a harbinger of things to come? Accenture is down 3.5% as we write.
Italian and Greek political crisis’ have Europe a bit edgy. On this side of the pond we have plenty of rumors and innuendo on political posturing, US Budget negotiation tactics and US credit downgrades. CDS’ on government debt moving higher and gold moving higher but no one really believes that the US will default. But it doesn’t hurt to buy a little insurance. Monday and Tuesday are going to be very interesting. One would think that Monday would be an up day for window dressing the end of the quarter and Tuesday would be up on new pension money. The budget fiasco could change all of that.
This is what we had to say last week on the big leap higher by stocks post FOMC. (H/t Arthur Cashin)
Market technicians say that market spikes – like the one on Wednesday – are followed by a couple of days of follow through buying but then produce less than stellar returns over the next two months.
It looks like that may be the case again. We still think that any market pullback should be met with buyers as the longer term bull is still intact. That is until the Fed withdraws from the battle field.
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.