This was a week when all the normal stock market stuff that we usually consider didn't make a difference.
What we needed was a degree in abnormal psychology to figure out what's going on politically. We were held hostage to the endless, and tedious, debt debate all week.
Early in the week, market players were relatively complacent about a debt-ceiling deal. They figured politicians would do their usual wrangling and then finally get it done. But as the week progressed, market players began to think, "These idiots may actually be capable of creating a debt downgrade or even a default!" And to quote the fellows from Public Enemy: "It all adds up to a fucking situation." Sorry for the language. I'm sick of all this shit.
With huge uncertainty hanging over us, many market players stood aside and let the market fall. We had a few brief periods of optimism, but closed weak every day this week as folks didn't want the risk of waking up to more bad news.
We are very likely to see a gap at the open on Monday. The big question is in what direction. If we have the rough outline of a deal this weekend, we'll see buyers step up. But if we don't have some clarity, it is going to be panic again.
Unfortunately, it isn't just the political debate that is cause for concern. The economic reports, particularly the GDP numbers this morning, have not been strong lately, and earnings season has been a mixed bag, with a few big names doing well but quite a few disappointments, particularly in the technology group. And then throw in slow summer trading and negative seasonality.
