Markets mostly steamrolled through last week’s potential obstacles. We had a mini sell the rally on Wednesday and Thursday but by Friday turned back up. Markets also overlooked the election of Jones in Alabama. Perhaps in their divine wisdom, they knew it wouldn’t be so terrible. Jones made the Sunday morning round of shows and did not line up with the far left, suggesting he might find some common ground with Trump.
Markets initially got some indigestion when Rubio from Florida said he might not be on board, but some last-minute arm wrestling enabled not only him but even Bob Corker as yes votes. The market liked this news and there finally appears to be a bill acceptable to Congress and financial markets. It's Santa and very hard for markets to go down right now.
The only possible fly in the ointment at this point is the Transports which is trying to form a high based on a 40-week calculation that started in 9639. As of Monday morning, this calculation is in jeopardy.
Since next Monday is Christmas Day there won’t be an update and I’ll try to fit one in next week let’s peek into what might happen next year. 2017 was a historic year in terms of the new President but also a market that became a runaway freight train. We had a massive time window that may have inverted and caused an acceleration as opposed to a high. There were any number of geopolitical events that didn’t fire off this year and somehow got postponed into the future.
In thinking about this year, most things that could’ve gone wrong didn’t. What will be the theme of 2018? The North Korea situation has not been resolved although I don’t think that is going to be the black swan. It’s the big midterm election year so the market will have stayed tied to politics again. For the most part, markets ignored terrorism, markets even recovered after Vegas. Now we have a situation developing in the Middle East where Turkish strongman Erdogan is threatening to put his embassy in East Jerusalem. Nothing ever changes in the Middle East.