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Originally Posted by MEMMEZZ
Any predictions on what the market is gonna do next week? I believe historically the week of thanksgiving is suppose to be pretty strong. But i dont know how thats gonna play into all this focus on Europe this year.
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And October is supposed to be the worst. Look what happened there, you had a month-long rally.
What will likely happen is the Super-Committee won't come to a deal by Monday (the day they're supposed to unveil anything). The two days that follow-up to their Wednesday midnight-deadline to get the plans drafted, will not happen (most likely). You'll see sequestration happen in 2013. The auto-cuts will be pretty blind and harsh. Short term predictions? Markets sell-off.
How far? Well they could sell off and find support at 1200 level, since the markets didnt believe the super-committee was going to pull-through anyways. Or, as some analysts are calling for, the SPX could drop 5%. Goldman Sachs is calling for a 10% drop in the markets. It's all relative to what happened.
There might be incentive to have a huge sell-off, as Tuesday we see Bernanke come out discussing the QE3 provisions they talked about in their meeting the previous month. Nothing positive is coming out of EU this week in terms of meaningful reforms or other things. You do have the EU Commission detailing plans for a euro-bond, but those are for years down the road and not for immediate implementation.
ECB will declare how much bonds it's been buying so far, but we all know whatever the amount is, it isn't enough to sustain stability in the bonds for long -- as the markets have so clearly shown the volatility of yield spreads.
Of course, the markets could turn around at 1200 and go for a year-end rally. But on what incentive? I can't see a defined one for now.
You do have about $100 billion worth of Treasury note auctions coming in this week, and there will more support for them from Europeans not wanting to buy their own. So the US will look like a better deal, for now. Of course, if Monday is a flop with the whole $1.2 trillion dollar super committee deal, that might drive away from investments. GDP is also coming out on Tuesday, and it might show growth as all the indicators so far have. But it's a question of "how much" GDP will be this quarter. We need 3%+ or more to fuel a decent recovery. We're at around 2% ish right now.