To The Moon

1. The US government is about to fall into the 22nd "shutdown" dilemma!

According to public information, the U.S. federal government generally requires congressional appropriations based on fiscal years to maintain operations. The current fiscal year is about to end on September 30, and existing funds can only support the operation of the federal government until September 30. If the two parties cannot agree on a new fiscal year budget or an interim appropriation bill, starting from October 1 , some federal government agencies will be closed.

Historically: The 35-day shutdown period from 2018 to 2019 was the longest.

Gov shutdown 35 days

At that time, the $S&P 500(.SPX)$ hit bottom on the second day of the government shutdown. During the 35 days of the shutdown, the $S&P 500(.SPX)$ rose by 11.6%. It continued to rise thereafter.

Prior to this, the shutdown on February 9 also rebounded after hitting the bottom that day.

2. The Stock Market During Government Shutdowns

A government shutdown is nothing new and isn’t necessarily bad for the stock market. The government most recently shut down for 35 days—the longest pause in operations in history—starting in December 2018. Over those 35 days, the S&P 500 returned 10%.

Since the mid-1970s, the government has shut down 20 times. The S&P 500 was positive during half of the shutdowns.

How do stocks do during government shutdowns

RBC Capital Markets strategist Lori Calvasina's team found that during actual government shutdowns, the $S&P 500(.SPX)$ s median decline was just 2%. Still, markets tend to rebound after squabbling politicians agree on shutdowns and reopen the government.

• In the 12 months following a government shutdown of 10 days or more, the S&P 500 has gained a median of 18.9%, according to RBC's research.

• Data from Truist analyzing the last 20 shutdowns going back to 1976 reveals that stocks have been up 50% of the time during the actual shutdown period.

3. Welcome a technical rebound or a more volatile？

If the U.S. government really shuts down next week, will the market experience a technical rebound or experience more volatility?

As September (the month with the most negative returns for U.S. stocks in the past 90 years) is coming to an end and October is approaching.

Ryan Detrick, chief market strategist at Carson Group, pointed out that the past three experiences have shown that once the $S&P 500(.SPX)$ index fell by at least 1% in August and September, it would rebound in October: rising in 2022, 2015, and 2011 respectively. 8%, 8.3%, 11%. Since the 1950s, when the $S&P 500(.SPX)$ fell at least 1% in August and September, nine out of 10 times it ended higher in October. U.S. stocks may usher in a technical rebound in Octorber.

Meanwhile, there are a "lot of other items going on" that are affecting the market, including higher interest rates, looming student loan payments, the United Auto Workers strike, rising oil $WTI Crude Oil - main 2311(CLmain)$ prices and more, according to Howard Silverblatt, senior index analyst for S&P Dow Jones Indices . “We're in a very volatile time now," Silverblatt said.

My choice would be the rebound point, how about you？