As expected, all Republican efforts at negotiation found that no one on the other side was willing to negotiate and a partial shutdown of the government began today. I expected markets to trade downward on that basis, but, as is often the case, the markets had a surprise in store. SPX gained $13 to close at $1695. RUT set all time highs intraday, pulled back a bit, and then spurted during the last few minutes of trading to close at a new all time high at $1087, an increase of $14 on the session. It appears that traders don't really take all of this government shutdown talk very seriously. As further evidence supporting that point, volatility dropped slightly over one point today with the VIX down to 15.5%.

Economic data has been rather positive both yesterday and today with the Chicago PMI increasing to 55.7 in September from August's 53.0. The Dallas Fed manufacturing survey jumped significantly from the August report of 5.0 to September's 12.8. And then today, the ISM manufacturing survey reported 56.2 for September, up from 55.7. So the economic data has been encouraging traders and apparently, they don't see the Washington political impasse to be a tradable issue. Or, more correctly, perhaps they don't see it as an impasse that will last long or cause any real economic damage.

 

Trading volume decreased today with 1.9 billion shares of the S&P 500 trading (the 50 dma = 2.0B). But trading volume on the NYSE was up 4% and trading on NASDAQ increased 6%.

I closed the 910/920 put spreads in my RUT Oct iron condor today. The remaining position stands at a net P/L of -$1,100 or -6%.

 

Now, the $64,000 question (a bit dated): Will the bulls continue that last minute push higher into tomorrow's market? Or will fears of the upcoming debt ceiling debate begin to take center stage and temper the bullish enthusiasm?