Time to worry about the cliff again!
We took a few days off from worrying but comments from Senators Harry Reid and Mitch McConnell yesterday both indicated that little progress was being made on the ongoing negotiations and that was all it took to panic people out of positions yesterday afternoon, as we gave back most of Friday's ill-gotten (low volume) gains.
In context, we're still making good, bullish progress but yesterday's action pretty much takes a "V"-shaped recovery off the table and now we'll have to fight and claw tooth and nail just to get back to our strong bounce lines by the week's end. Anything less than that will not be a bullish signal into the weekend. Our levels remain:
No serious damage yet but those paying attention to what's going on in China are becoming very concerned about the Shanghai Composite, which just spent it's 2nd day below the the very-critical 2,000 line – and that's down 16.66% since June.
So far, the Hang Seng has avoided the same fate – trading at 22,000 and that's up from 18,500 in January (18,9%) but it's going to matter a lot which one of these indexes breaks first to follow the other. So far, the drag is down, with the Shanghai finishing today down 0.9% at 1,973 and the Hang Seng dropping 0.62% to finish at 21,708. It's been a while since China has been a big concern but, if we finish out the month this way – expect it to be a big topic of conversation in December.