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It's not yet a done deal in D.C., so market direction uncertain

  • Stock futures point to a flattish open, as nerves return to the market with reports of a deal on the debt ceiling looking premature; meanwhile, the partial government shutdown enters its 11th day.
  • Yesterday was Wall Street’s largest single-day percentage gain since January, but it's worth remembering that much of the gains reflected a short squeeze - not the kind of well-founded, sustainable rally needed to fully shake out the threat of more volatility.
  • JPMorgan Chase +1.1% premarket, as Q3 earnings were better than expected on strength in deposit growth, credit card spending and investment banking results; Wells Fargo -1.5%, as Q3 earnings topped estimates but revenue fell a bit shy.
  • The yield on the 10-year Treasury note slipped to 2.663%, crude oil futures fell 1.2% to $101.79, and gold lost 0.7% to $1,288.20.
Comments (3)
  • Land of Milk and Honey
    , contributor
    Comments (3555) | Send Message
     
    Thank you for this insight!
    "...worth remembering that much of the gains reflected a short squeeze - not the kind of well-founded, sustainable rally needed to fully shake out the threat of more volatility." I hadn't thought about short covering.

     

    Can anyone tell me if you can tell if buying is to cover shorts, or how to tell? (Per stock you can see what % is short & likely to be covering on good news... but for the overall market how do you tell?)

     

    Also for overall market covering, wouldn't the buyers just hold on till the actual problem is solved?? Thereby being sustainable?
    11 Oct 2013, 09:31 AM Reply Like
  • Rope a Dope
    , contributor
    Comments (531) | Send Message
     
    I saw a feed at 12:30 PM (Eastern) yesterday that Obama had already rejected Republican proposals and was amazed the market continued to climb. I dumped everything on Tuesday and will more than likely wait until there is a resolution before buying back in. I don’t think the rewards are worth the risk.

     

    I’ve noticed some oddities over the last few days, notably the number of electric utility stocks that have advanced. I’ve never had so many utility companies turn up in my screens and I’ll assume investors were going for safety. These are stocks that are not highly shorted.

     

    Curls, my trading program (Merrill Edge Market Pro) has a Sales Log which shows the conditions of the transaction and displays when short sales occur. Outside of something like this, I’m not sure how you could identify transaction conditions.
    11 Oct 2013, 10:04 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3555) | Send Message
     
    @Rope a Dope

     

    Thanks! Good to know that the info is avail, not mere guess work. I've got a retail broker (scottrade) and nothing fancy...

     

    Interesting insights. That utilities are showing up - I agree, would indicate wanting to get in "but safely" without the whole shorting game to move them too far.

     

    Where did you find a feed with Obama's reject mid-day Thursday? Looking at marketwatch, I couldn't even find a feed on the deal offer until easily 1/2 hour later as it already moved the markets. It didn't show on SA until much later. Nothing I saw showed Obama's turning it down, or even hinting that he would... I understood the market not going down more, but not the wild riding up. It wasn't down enough, so it was an "overbuying" bounce up for a deal not yet done. I kept getting a feeling that if it kept climbing too unrealistically, then some silly little thing (like one companies poor earnings) would trigger a selloff (actually an over sell) down a bit and be the place to get in. (However, I have a lot in cash, so that might be wishful thinking by me.)
    13 Oct 2013, 09:35 AM Reply Like
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