US congress reached an agreement to re-open the government and raise the debt limit right before the October 17 deadline. Although the agreement only provides a short term relief and kicks the can down the road to Jan/Feb 2014, stocks still went up strongly in reaction as another uncertainty is removed and investors get can back and focus on company earnings and economy development. S&P 500 index closed at 1744, up 2.42%, Dow Jones Industrial Average gained 1.07%, while Nasdaq composite increased 3.23% for the week.
The political development in the past week validates what the charts have told us last week. In the blog last week, we talked about that the markets were expecting a political solution to reopen the government and raise the debt ceiling based on the chart analysis for S&P 500 index. As a short term agreement has been reached, the political turmoil is behind us and investors are turning their focus back on the company earnings (and they have been strong for this earning season so far) and economy growth. With S&P 500 index gaining momentum and trending upwards in both the weekly and daily charts, we expect to see the uptrend to continue for another few weeks.
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| Weekly chart of S&P500 index |
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| Daily chart of S&P 500 index |
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