Weekend Review October 11, 2013

By Friday, Tuesday did not happen; and so it goes during highly volatile and emotionally driven news cycles such as the debt ceiling and shutdown of the American government. On Tuesday it appeared that big money was stepping aside as well watched and highly liquid stocks sold off hard on heavy volume but by Friday the indexes bounced back just as swiftly with gains of more than 2% on Thursday alone. With a looming deadline this upcoming week, less is definitely going to be more.

I don't know if the market is pricing in a default or pricing in a resolution. Even when either of these events occurs there is still no telling which direction the market will react as it could be a sell the news event regardless. We don't have to look much further back then the 2008 Lehman collapse to know that the market is not always prepared and is willing to suspend disbelief of the improbable because it just can't phantom it actually happening, and this is where the real danger lays.

This is not the week to make assumptions on how the Clowns of Capitol Hill are going to behave. There is a core group of ideologues who clearly have little understanding of anything at all and are acting in an irrational manner with little concern for the potential effects of their decision making. As push comes to shove I do not underestimate the reptilian part of their brain kicking into high gear as the stress and tension mounts resulting in dangerous consequences and precedence.

I know that I trade my beliefs and I also know that there is a fringe group in the US that governs by theirs. This is an important point because when there is a belief system that is subscribed to 100%, one only has to look at the patterns and events that have happened before to be aware of what people are capable of doing. It is misguided to think that it can never happen here even though it happens everywhere else on the globe. It is misguided to think that it can never happen here even though historically some of these things we believe we are above have happened here already.

My preparation for this week is worse case scenario. I'd rather prepare myself for the most negative outcome possible than be optimistic that just like the movies the powers that be are going to wait until 00:00:01 to cut the red wire. Even then it still might blow depending upon market reaction.