| October 02, 2013 | | | | | |
 | | | | From Shutdown to Breakdown | | | - Stocks head for another rough morning
- One question all investors must ask today
- Plus: More bearish signals from gold?
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| | | Greg Guenthner coming to you from Baltimore, MD...
 | | Greg Guenthner | Even with government operations grinding to a halt, stocks continue to bounce around like a deranged crack addict this morning.
The broad market is staring at a sizeable drop today, potentially washing away all of the gains stashed away during yesterday's post-shutdown bounce. If lower prices hold, today will be the S&P's eighth close in the red out of the past ten trading days. Brutal…
For now, it's pins and needles. I've reminded you over the past couple of days that the broad market is at an important juncture. Buyers will need to step in soon if we're going to kick-start a fourth-quarter rally. But right now, they're nowhere in sight…
That brings me to an important question that all investors should be asking right now: What will it take to scare the market lower from here?
First, we'll need a new catalyst. The shutdown is on. The market has already discounted this event. Now, it will need fresh news to push it lower. The way I see it, two potential events could completely derail any chance for a bounce over the next week or two…
The first is an extended shutdown. Out of all of the polls and reports I've seen, most people are expecting this shutdown to last just a few days or a week at most. If investors are given any indication that the shutdown could drag on beyond that time frame, we could see more spooked sellers come out of the woodwork.
Next is a potential debt default. That's right, the debt limit debate is next on tap after all of this shutdown nonsense.
Here's a quick update from a Bloomberg bulletin: The U.S. has started using final extraordinary measures to avoid a breach of the nation's debt limit, Treasury Secretary Jacob J. Lew said as he pressed Congress to increase borrowing authority "immediately"…
Well, I'm not sure how "immediately" can happen when no one is at work.
As far as the markets go, you should closely watch the price reactions to any government sound bites this week. If stocks fail to bounce—even on "good" news regarding the potential end of the shutdown—we could very well see lower prices this month.
Of course, it's virtually impossible to say what congress has up its sleeves for the next round of debates. After all, there's no room for logic in Washington…
"Kind of odd that on the first day of a government shutdown that we have newly operated government exchanges open for business," writes a skeptical reader regarding the introduction of the Affordable Care Act on the day of the shutdown.
Yep. Even when the government closes its doors, it still manages to grow bigger and bigger…
| | |  | | | | Rude Numbers | Targets, Predictions and Wild Guesses
| | | | 6,000 | Tesla Model X SUV's were pre-ordered over the weekend. Tesla shares have now risen over 400% year-to-date. | | $41 | just dropped off the price of gold yesterday. Despite prevailing uncertainty during the government shutdown, the yellow metal is being shunned as a safe haven. | | 800,000 | federal workers have officially been furloughed in the wake of the federal government shutdown. | | 1,087 | was yesterday's closing price of the Russell 2000. That's a new all-time high. Meanwhile… | | 1,678 | is where you'll find S&P futures early this morning. Stocks look like they're about to give back yesterday's gains after a weak jobs report failed to boost the averages… | | | | | | | | Rude Trends | When to Buy... When to Sell
| | | While everyone was distracted by the government shutdown, gold futures spent the first day of the new quarter searching for lower prices.
Futures plunged below $1,300 early Tuesday morning, bringing a bearish head and shoulders into play. Here's how it looked at yesterday's close:
Gold futures have recovered a few bucks today, rising to $1,295 in early trading. But if buyers don't step up big here, this breakdown looks like it's headed toward the June lows.
Over at the Rude PRO, we've made some of our biggest (and fastest) gains this year riding volatile gold trends. I'll be watching this new development closely and offering up my best plays here.
[Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]
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