Tonight's market wrap-up will be brief as there isn't much new to report. The markets gyrated up and down today before closing the session flat. This isn't unusual after a big move in either direction, but today it's mostly due to traders waiting for the US House of Representatives and Senate to vote on Speaker Boehner's plan to raise the debt ceiling.
The outlook for tomorrow is simple. If the House votes yes and the Senate votes no, I will expect a moderate decline in the markets. If both the House and Senate vote yes or no, I'll expect either a large rally or a large fall respectively.
The only way to handle situations like this is to tread lightly. I'm positioned mostly in cash with just a few long positions because I think a deal will eventually be struck. I'm also holding a small short hedge just in case we see further selling if no deal is reached tonight--or worse, if no deal is reached even by August 2nd. I will not be breaking the bank no matter what the outcome is.
Tonight I will be watching the futures closely to see how they react to the US House vote. I suspect that if it passes, the markets will take it as a sign of Speaker Boehner finally getting his party in line--even if the Democratic held Senate votes it down as promised. If not, it indicates that a consensus between the two parties by the deadline is increasingly unlikely.
Tomorrow's trading will be interesting to say the least. Stay nimble, and good luck.