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Prediction:
Situation:
Opportunity for subs:
Pick a really good VIX strategy and a really good market trend strategy. Make sure they both have good risk controls and you will be happy.
This weekend I went back to look at S&P500 behavior during previous government shutdowns. To my surprise, they were not big events in the stock market. Typically, the market tended down a little during the early part of the shutdown–and up after the shutdown ended–but it wasn’t usually dramatic. I didn’t bother to compute exact %s.
I also went back to look at the response to the 2011 debt ceiling crisis in 2011, followed immediately by a downgrade of US debt. The market took a 17% hit from July 22 through Aug. 5, after which it bounced around a bit until it bottomed slightly lower nearly 2 months later on Oct. 3. Then it took off.
Just guessing: If this is like the previous actual shutdowns (and unlike the debt ceiling crisis), then the market might wander a bit until it’s resolved and then move higher. So the advice offered by Agathos1 seems quite plausible.
You’re exactly right. Barring anything unforeseen, it will be a wandering market which is good for traders
