For those of us who have become accustomed to the constant gap ups the past 3-4 years, seeing the market gap down 4 sessions in a row is like seeing a unicorn. Even during the major selloffs since March 2009 there has been a persistent bid in the overnight market, followed by the flushing happening during the actual market hours. So a strange time indeed. We can think of this morning's gap down as taking away a portion of yesterday's furious last hour rally, which came simply on the idea that people who cannot agree with each other will be back in D.C. Sunday night to disagree with each other more. Again the easier path for optics is for the GOP to vote for a "tax cut" after Jan 1 rather than do anything before Dec 31.
Yesterday's rally took away the short term oversold conditions that looked to be building although we are hostages to the headlines right now so technical analysis is somewhat backseat. That said, today will be the third day the S&P 500 has fallen out of it's ascending channel. What is interesting is the downside gap that was created a week ago due to the failure of plan B is within that same channel so if the market has a tremendous gap up into the eventual "good news", it will be very interesting to see the behavior from there. But until this is settled there is very little to see or do as the market is dominated by politicians and we're back into a macro environment where almost everything will trade up or down based on news events.
Any securities mentioned on this page are not held by the author in his personal portfolio.