The stock market rally as soon as Congress and the White House can make a deal on the debt ceiling. This is not a ‘what if’ scenario. It is something that will happen. The rally may be short, but it will happen assuming there is no other major news that week. Here are some stock market trading strategies that you can consider. It’s a risky game, so keep that in mind.
I like watching the markets move on fundamental news. This would be things like earnings reports or major macroeconomic events. I even like watching how it reacts to economic data like GDP or jobs numbers. The reason it’s fun to keep track is because they are usually predictable. You just have to know when to get in and get out. If you do not know how to invest in the stock market in this manner, I would stay out of it.
Some experts say that it takes around 7 days for the market to react and adjust for earnings data. I think it takes a similar amount of time for major economic news as well, as long as it’s the only factor.
When the debt ceiling is raised, I would imagine that would be a major force moving the broader stock market. People are nervous about whether this will happen. It will happen. Believe me, no one is getting re-elected if it doesn’t happen and the US goes into default.
The US will never recover from a default, even if we eventually reach a deal afterward. It’s like taking a hit on your credit score. It takes a long time to recover from that. The politicians know that. They are just playing games until the end. But they will pass a deal and it will rally the stock market, even for a short time. If you like fundamental investing, this would be a good time to buy the dips in anticipation of this event.