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Spending Bill Uncertainty Sends The Market Lower, Time To Get Excited
After the market hit yet another milestone in early trading yesterday, profit taking finally set in ahead of Friday's spending bill deadline.
As I mentioned before, Friday, January 19th, is the official deadline for a spending bill agreement or the government will shut down. They have avoided this twice last year by crafting short-term extensions. But their most recent extension expires on Friday. And this time, any kind of continuing resolution looks like it may be harder to come by.
The main sticking point is DACA and border security. Both sides have dug in. And it's hard to imagine a compromise in such a short amount of time remaining.
But as I also remarked before, maybe a deal on DACA doesn't need to be reached by Friday after all. In reality, DACA is still good thru March 5th. And with legal challenges, it could go on even longer without a deal. So we'll see what happens. But DACA or not, a spending bill compromise is still going to have to be reached to keep the government funded by Friday. And that's what's likely going to roil the market for the rest of the week.
Quite frankly, I see any pullback due to uncertainty over the spending bill as being transitory. And I view any kind of pullback as a buying opportunity.
Surely I'm not the only one glad to see yesterday's pullback from the highs take place. And quite honestly, I'm hoping for more. Not too much. But a retracement to 2,750 or even 2,700 would be a welcome site and give many investors the opportunity of getting into stocks they only wished they could have gotten into at the start of the year.
So get your watchlist in order and be ready to act.
And don't despair if we see some additional down days. Look at the bigger picture and the opportunity it presents.
Remember, the strengthening economy, historical tax cuts, and surging earnings are creating a very bullish backdrop for a continuing bull market, short-term hiccups notwithstanding.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
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After the market hit yet another milestone in early trading yesterday, profit taking finally set in ahead of Friday's spending bill deadline.
