US Strategy 16th October 2013

Strategy Entry Stop 1st Target 2nd Target Long 1697.50 1693.25 1706.25 1717.50

Key Levels
1726.75	All Time High
1717.50	R2/Post FOMC Clsing
1706.25	Yesterday's Open
1697.50	2nd Aug Closing
1693.25	Pre-FOMC Support
1683.75	Resistance turned Supp
1675.00	Oct High-Low 50% Fib

Review With the US political unrest, the continued government shutdown and just a day away from the debt ceiling deadline, we have seen the S&P 500 drop after a four day rally. Senate majority leader Harry Reid rejected a House plan to halt the fiscal impasse and Senate leaders stopped talks on a bill that would fund the government through Jan 15, 2014 and suspend the U.S. debt limit until Feb 7 which sent the S&P 500 back down to 1689.50 but talks have re-opened and carries positive sentiment that an agreement is within reach. The four day rally was an optimistic view that lawmakers would indeed reach a deal to prevent a government default which now seems to be losing ground as we approach the deadline with the S&P 500 yesterday closing at 1692. Investors will be looking to see the Senate come through and raise the debt ceiling by today.

Strategy Carrying from the public's sentiment, there is genuine believe that the debt ceiling crisis will be averted by today and house representatives will look to re-open government. The strategy for today is to go long at 1697.50 which was the 2nd of August closing which was the highest close before the No Taper announcement. We will look to book profits at the 1st target being yesterday's Open of 1706.25 followed by our 2nd target at R2. In the likely scenario of an agreement being decided, we feel reaching these targets may well happen. Companies like IBM and Pepsi Co. will also be announcing their Q3 results which might stir up movement going into the cash open.

Stop (Possible Cause) A break below the Pre-FOMC meeting may well start a downtrend as seen previously in early October. This can be triggered with a failure by the Senate to come to an agreement in time.