What? No Christmas rally?
Going forward, the near-term road map is a bit murky. The move from ~1675 to the close (~1692) Thurs was a lot about “pain” but it seems like the most inappropriate positioning has been corrected. Therefore, to get back to ~1700+ will require more clarity out of Washington and given that 1) this 6 week plan is still vague and 2) a big new deadline has now been placed on the calendar (11/22) investors may be reluctant to chase much further from here. Stepping back, even in a perfect world (i.e. Washington resolution, strong Q3 earnings, moderate Fed policy withdrawal, etc) the SPX may have a tough time getting much beyond ~1750 in the near-term (i.e. by the end of Q1:14). The most likely path forward may be more of the range-bound action we have been seeing since May and the odds could be good that the highs for ’13 have been seen on the SPX (and rather than the US, Europe could instead be the one to have a surprising year-end rally).