***Notice due to a Windows Update I’m currently unable to record the Morning Prep Video.  I will work on the problem but if I can get it fixed the video will be late.  Sorry for the inconvenience. 

Speculation that elected officials will eventually get their act together and agree on a stimulus package continues to elevate the indexes pointing to another gap up open.  Pelosi and Munchin continue to talk, but it’s unclear if the President will reverse his thinking and support a big package deal.  One thing for sure is that this creates a dangerously volatile market condition that’s more akin to gambling as traders bet on the possible outcome.  Consider your risk carefully as we head into a weekend with incredible uncertainty as to what happens next.

Asian markets wrapped up their week with mixed but mostly lower results by the close.  European markets are also cautiously mixed as they monitor US stimulus efforts.  However, US Futures point to another gap up open as hope of a deal continues to inspire bullish speculation despite the dangerous consequences of news-driven extreme volatility.

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have no confirmed reports; thus, there are no notable reports.

News and Technicals’

Markets held up yesterday after Speaker Pelosi made it clear there will be no stimulus bull that does not include a broader response, including aid for cities and states.  However, Munchin and Pelosi spoke on Thursday to resume negotiations, but at this time, it’s unclear if the White House will accept a broader proposal.  With the upcoming Supreme Court appointment hearings, there is little time to hammer out a deal before the election. Still, the market itself is holding on to hope, and lifting the indexes higher speculation an agreement is forthcoming, setting the stage for incredible volatility and sensitivity to the Washington spin cycle.  Betting a deal will come together could prove profitable but could prove very painful should they fail, and traders wake up to gap down overnight reversal.  Consider your risk carefully heading into the uncertainty of the weekend. 

Technically speaking, the index charts are bullish as they work to break recent price resistance levels.  That said, volatility remains very high, making the path forward quite dangerous as we wait on politicians to get their act together.  A big ask this close to a presidential election.  Anything it possible, and trading in this environment is more than gambling.  If you do trade, measure the risks carefully, avoid overtrading, and be willing to pivot on a moment’s notice.

Trade Wisely,

Doug