Debt Ceiling Deal and Dovish Draghi

We should be much higher considering we got the debt ceiling extension without any headaches and then a dovish Draghi at today's ECB meeting. So we had a good news wave that peaked out at SPX 2470 this morning.  That is the high optimism price point in this market.  Last week's low of SPX 2430 on North Korean missile launch is the low optimism price point.   Keep that in mind when trading this chop over the next couple of weeks. 

There is a lot of caution that I hear from financial TV, but the put/call ratios and the low VIX tell me that real money is not doing much here.  The low VIX is a tell that the pullback should be shallow, as the VIX is a very good predictor of near term potential losses in the market.  You would think with North Korea and a massive hurricane heading towards the US, the market would be a bit more nervous.  But this market has been so resilient for so long that the algos are all programmed to buy dips and support the market on down days.  That is why you got the V bottom on Tuesday, saving the market from an ugly close. 

Remember that last week, after North Korea fired a missile past Japan, there was a sense of optimism that the market was able to shrug off that event and head towards 2480.  The crowd got back to being bullish.  Now they feel like they are offsides. They don't turn on a dime.  I expect them to take a few days to sell off some positions to get to a more risk off stance.  One supporting factor, a big one, is the strength in bonds in the face of a flat stock market. The lower interest rates will help to keep the stock market from completely falling apart here. 

If we do selloff again towards 2430, I would expect there to be a lot of fear mongering on CNBC.  It should be a point where one should put on longs for the eventual ride higher.  This bull still has a while to go, and you need to keep that in mind when trading during these choppy times.