Joshua Hayes'  Instablog

The market has become quite an interesting beast as of late with wild swings on every press conference DC makes. First Boehner's comments sent the Dow down 50 points in a split second only to recover after Reid and Schumer respond. Nancy Pelosi was kind enough to wait for the market close to make her comments, but at the end of the day the market has moved higher again. According to Bloomberg volume was lower across the board and continues to be light overall. We are still operating without a true follow-through day, but despite the overbought conditions the short-term trend is higher.

After the bell we got word the Democrats proposal would like to raise over 1.6 trillion in taxes and immediately raise spending by 50 billion. Republicans on the other hand are ready to concede the tax issue, but not the spending. For anyone to think a reasonable deal will be struck is crazy. Collecting less than 18% of GDP and spending 25% of GDP is not a sustainable model. You simply cannot overspend what you take in to eternity. It is not sustainable. We can argue over tax rates and where we should or should not cut spending, but if you can't agree to pay only what you take in then no real solution will be had.

We are now in extreme overbought territory and it would be good for the market to take a rest over the next few days. Even one day of a pull back on light volume would do this market some good. We only need to see a few days of this market taking a rest. Distribution would not be welcomed at all and we must avoid any serious price decline. If stocks are hitting buy points take the signal and have an exit plan.

Hopefully tomorrow we can avoid seeing any more press conferences by any congressional member! Get out and enjoy the weekend.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.