US has enough votes to end government shutdown

U.S. House passes legislation with 285 votes (216 votes needed) to end government shutdown & raise the debt limit, and the bill now goes to President Obama to become law, which he'll sign immediately

Stock Market & Political News Analysis

S&P 500 was trying to rebound from 1670 at the beginning (8 Oct 2013)
But it failed after economic data showed a huge drop in Economic Optimism / Consumer Confidence
S&P 500 then broke below important support @ 1670
After failing to rebound, S&P 500 continued to drop & closed @ 1655.45
S&P 500 is severely oversold & will try to rebound but should continue to drop more if there's no sign of resolution to end the US government shutdown & raise the debt limit

President Obama said he's prepared to talk about anything, but only after the shutdown & debt limit is resolved
This shows that he's not really open to negotiations during the shutdown, especially over Obamacare
Obama also issued a statement that he would veto & reject the approval of a "supercommittee" to negotiate US spending & deficit
Boehner said in private that he's not going to bring up a clean CR & "there's no way the president holds firm"
"I don’t know how the debt limit will be addressed, but it won’t be by Republican capitulation"
President Obama said: "If that's the theory... it's not going to work"

This confirms our theory that "They're using the government shutdown & debt limit issue to pressure each other into losing their political battle but both sides have not backed down since then"
It seems like their game plan is to stubbornly hold firm & continue waiting for the other party to give in instead of properly trying to resolve the situation, then blame the other side when a shutdown happens or if US fails to pay its bills on time
Although both sides said in public that they wouldn't let the government shutdown & they're willing to negotiate, results showed otherwise
Both parties are prioritizing their political agendas over the economy & people of America
Neither are willing to be the better man & save US from this fiscal crisis

Therefore the shutdown & debt limit issue is unlikely to be resolved soon unless they change their mindset
Look to sell S&P 500 tomorrow if the market fails to rebound & continues to drop (9 Oct 2013)

Stock Market Analysis

President Obama said that he would be willing to accept a short-term debt ceiling increase to avoid a default, but Republicans & Democrats might not agree on the debt ceiling & that's not going to end the US government shutdown
Nonetheless, it should provide some small hope & relief because if US cannot pay its bills on time, US would fall into a fiscal crisis that could damage the global economy

China & Japan also pressed US to resolve the situation
The last time US debt payment was in jeopardy, a last minute agreement was made under pressure from falling markets & warnings of global consequences
Most people are still hoping that US will do the same again this time

Look to buy S&P 500

However, we should also consider the fact that both Republicans & Democrats were willing to let the US government shutdown for their own political agenda & blame each other for it
They're using it to pressure each other into losing their political battle but both sides have not backed down since then

US economic events 4 October 2013

9:15am
FOMC Member Dudley Speaks                         
9:30am
FOMC Member Stein Speaks

NFP data will not be released due to US government shutdown

Stock Market Analysis

US stock futures dropped from 1684 to 1674 after markets closed yesterday, rebounded to 1682 & dropped again to 1678
President Obama refused to negotiate over Obamacare to end US government shutdown
House Democratic leader also said that Obama will not invoke the 14th amendment to lift the U.S. debt ceiling on his own
If the debt limit is not raised, US government will not be able to pay its bills by October 17
Investors should now focus on the weakened US economy in a prolonged government shutdown & debt limit instead of QE
US economy data will have a much higher impact now also because less data will be released due to the shutdown

Stock Market Analysis

The market will be more volatile after US government shutdown
There will be profit takers & also bargain hunters
Some say that they have cashed out 90% of their winnings & waiting for a good bargain
History has shown that previous shutdowns caused S&P 500 to drop 0.8% then gain 1.1% 1 month later
Trade less & more cautiously for now

Market Analysis

We issued a sell signal too early today as USD/JPY spiked to 98.5 before really dropping, but those who sell @ 98.3 later should win
Apparently the market still needs 30 minutes-1 hour even after a US government shutdown before showing the real direction & currencies are more volatile than stocks

Not safe to trade anymore

Not safe to trade anymore as House vote is expected at 6 or 7pm EDT
We speculate that S&P 500 will close below or around 1680 today & rebound tomorrow when US government shutdown is averted or most likely delayed for at least a week
But we do not trade on speculations alone as it's too risky & stocks are very volatile now, wait for a confirmation before trading

Will US government shutdown?

Stocks are falling as US government shutdown at midnight tonight seems more likely
Republicans and Democrats are not compromising in their political battle even though they do not want it to happen
Both sides are trying to blame the other even before a shutdown happens instead of negotiating for a proper solution

Democrats: "Tomorrow, the Senate will do exactly what we said we would do and reject these measures"
"At that point, Republicans will be faced with the same choice they have always faced: put the Senate's clean funding bill on the floor and let it pass with bipartisan votes, or force a Republican government shutdown."

Republicans: "I personally believe that Senator Reid and the president, for political purposes, want to shut down the government"
Although they also said: “We will not shut the government down, if we have to negotiate a little longer, we will continue to negotiate.”

It seems that the only hope is that the Republicans will have no choice but to compromise & lose this political battle to avert a government shutdown because they show that they are willing to negotiate but the Democrats are not

Conclusion: US government shutdown will not happen if they focus on what's more important & do what's good for the country
Stocks should fluctuate today because they should continue dropping but it's already too low
If the shutdown is avoided at the last minute, stocks should rebound & it'll be a good time to buy
Trade less before that to protect your investment