The stalemate continued in Congress over the government shutdown Wednesday, and a disappointing jobs report resulted in a market skewed to the downside.
In an interview late in the day, President Obama stated that he would meet with congressional leaders in the evening. But fear spread that the government shutdown could last until the debt limit issue is confronted, and that deadline is Oct. 17.
ADP reported that private sector jobs came in below forecasts for September at 166,000 versus an expected 180,000. A revision of August’s jobs numbers down to 159,000 from a previously reported 176,000 was especially disappointing.
At Wednesday’s close, the Dow Jones Industrial Average fell 59 points to 15,133, the S&P 500 dropped 1 point to 1,694, and the Nasdaq fell 3 points to 3,815. The NYSE traded 691 million shares and the Nasdaq crossed 402 million. Decliners outpaced advancers on both exchanges by about 1.5-to-1.
A magnified section of the S&P 500’s chart shows how crucial it is for the index to hold at the 1,676 to 1,680 level. And the way the negotiations, or lack thereof, are going in Washington, the chances of a break of these support lines are increasing.
MACD is on a sell signal, but the 20-day moving average is on a buy signal. This is the “hopeful line” — telling us that any agreement, no matter how minor, could result in a rally.
Gold, as evidenced by SPDR Gold Trust (GLD), is in a major bear market that isn’t likely to end soon. Even the budget crunch and a threat that the U.S. will renege on its obligations haven’t resulted in a serious challenge to the bear market resistance line at about $134.
Wednesday’s bounce closed a trading gap that opened on Monday. But MACD is flashing a strong sell signal, and the latest formation appears to be a mini head-and-shoulders with a target of $115.
Conclusion: The stock market is in the hands of the politicians — how does that make you feel? And the longer the non-negotiations continue, the greater the chance of a major breakdown. Traders should remain on the short side while investors accumulate cash that can be committed in the event of a downside break.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.