Heading For A Rise In The S&P 500?

I predict an S&P 500 rise for Tuesday based on “progress” in Congress

I predict an S&P 500 (SPY) rise for Tuesday, based on movement within Congress to avoid a debt default. The S&P 500 (SPY) rose .41% yesterday, the Dow Jones Industrial Average (DIA) rose .42% yesterday, and the NASDAQ 100 (QQQ) rose .62% yesterday.

My S&P 500 (SPY) prediction was wrong for Monday, as I anticipated more Congressional bickering and thus lower stock market prices ahead. Although my prediction was correct for the first part of the trading day yesterday, Congress did decide to move, so one cannot be correct 100% of the time, unfortunately.

So for Tuesday, Senator Harry Reid appears to be “very confident” that the Senate will reach an agreement, despite the fact that that said agreement has to be pushed through the House and then through the President to avoid a default. It appears that investors do not think a debt default will actually happen, judging by investor euphoria based on glacial movement by Congress in the last few days. I may be wrong, but I think we might be looking at red markets before October 17th if Congress does not solve this quickly. For now however, I think we are looking at a green day for stock markets and the S&p 500 (SPY) for Tuesday.

From a technical perspective, the S&P 500 (SPY) looks incredibly bullish, with a positive MACD (.430) and an uptrend in the RSI (58.72). The RSI has yet to reach overbought levels and the MACD is on a tear, so the technicals certainly support the notion of an up day tomorrow, at least for now:

Internationally, European markets finished mixed yesterday, likely still skeptical over current Congressional woes. Asian markets appear to be more optimistic however, with both the Nikkei and Hang Seng indexes trading in the green as of the time of this writing.

US futures markets also appear to be hopeful at the time of this writing, although they are not trading as robustly as International markets at this time.

Lastly, the VIX Index (VXX) rose a 2.23% yesterday, suggesting a heightened sense of fear in the marketplace, despite strong technical indicators from the S&P 500 (SPY). A 2.23% VIX rise could suggest way lower markets ahead, particularly if the VIX continues to shoot; however since most investors appear driven by the news out of Washington right now, anything is fair game.

Tomorrow brings us the Empire State Index Report, which is forecast to decline, and we are also expecting earnings reports from market bigwigs Citigroup (C), Coca-Cola (KO), Yahoo (YHOO), and Intel (INTC), to name a few. Positive or negative, they will likely be drowned out in the noise from Washington.

Our fun fact for the day involves the world’s most expensive diamond being auctioned off in Hong Kong for $30.6 million. The 299 carat diamond will surely fit right into Hong Kong, as that city is as glitzy as glitzy gets.

Bottom Line: I predict a stock market incline and a rise for the S&P 500 (SPY), based on current news out of Washington. But, the news could change quickly, leaving investors in the dust. Happy Trading!

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