With US federal government shut down entering the 5th days and no end in sight, stocks end up flat with downward bias for the week. S&P 500 index closed at 1690, down 0.07%, Dow Jones Industrial Average lost 1.22%, while Nasdaq composite increased 0.69% for the week.
We talked about the divergence in daily chart and weekly chart of S&P 500 index last week. From the daily chart below, we can see the resilience of the index as it has been trying to hold above the 50 day moving average throughout the past week. If a political solution in Washington can be reached to re-open the government over the weekend (although unlikely), we can expect a pop in the index to the upside. In the weekly chart, the index has come down a bit toward the trend line support at 1650. The best scenario is for the index to be flat for another one or two weeks so the index in daily chart and weekly chart can all lined up at around the same supports level and rally from there to the end of the year. This timing aligns well with the US debt ceiling deadline on October 17 so it is all hinged on if the congress and senate can reach an agreement to raise the borrowing limit. Otherwise, we will soon see the index heading towards the downside support at 1600 level.
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| Daily chart of S&P 500 index |
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| Weekly chart of S&P 500 index |
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