Although the action on Capitol Hill appears has certainly been frenzied, the stock market continues to yawn. Yes, it is true that the intraday volatility did pick up in earnest on Tuesday as the algos pushed and pulled the major indices in a rather violent fashion after each and every headline, comment, and/or rumor out of Washington. But with the S&P 500 still just a stone’s throw from its recent all-time high, traders don’t appear to be worried.
The chart below shows the closing prices of the S&P 500 on a weekly basis since the first quarter of 2009. The first thing to notice is the most recent price resides in the upper right hand corner of the graph, which, in and of itself is a good thing.
S&P 500 Weekly
The second takeaway from this chart is the fact that the current reaction in the S&P 500 is nothing compared to the last two times Congress acted like infants in front of the entire world. Note that the 2011 edition of the budget battle created a very negative reaction in stocks. In fact, the S&P 500 fell nearly 20 percent during the ordeal. However, to be fair, the crisis in Europe also lent a hand in terms of the overall bearish mood.
The next oval on the chart shows…
David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.
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The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.