Looming Debt Ceiling Crisis 2011 Déjà Vu

Let’s not forget about the looming debt ceiling crisis. It
is the same political set up as pre-election year 2011: Democratic President
with a split Congress composed of a Democratic Senate majority and a Republican
House majority.

The banking crisis may have been averted, at least for the
time being. War in Ukraine drags on, but it still appears more like a
protracted Cold War 2.0 scenario that the market has shrugged off. The earnings
trough may indeed be ending. But! Let’s be devil’s advocates here.

The standoff in 2011 between the White House and House
Republicans is eerily similar to what’s developing in 2023. Markets topped out
on the last trading day of April 2011 and entered a mini-bear phase with
S&P down 19.4% on a closing basis before bottoming on October 3.

2011’s Worst Six Months were negative with the Dow down 6.7%
and S&P down 8.1%. NASDAQ’s Worst 4 Months July-October were down 3.2%.
S&P finished the year essentially flat at -0.003%, Dow was up 5.5%, NASDAQ
was off 1.8% on the year.

Uncertainty & headwinds can take a bite out of usual
pre-election year gains. Heeding our Best 6 Months MACD Sell Signal when it
triggers will likely be the prudent course of action. Review your portfolio. Get
prepared to lock in these BSM gains, sell losers & tighten stops.