As September proved its reputation as one the worst trading months of the year, Wall Street faces a looming government shutdown, which will take effect on October 1 if a deal isn't reached on Capitol Hill.
But what's bad news for the country and the economy might not make its way to Wall Street in the way you'd expect if the charts have their way. Action Alerts PLUS team member Carley Garner stopped by TheStreet to break down why stocks could be headed higher with or without a government shutdown.
The commodity broker and market technician breaks down the level to watch in the S&P 500, 10-year Treasury futures and gold prices in the video above.
FULL VIDEO TRANSCRIPT BELOW:
CARLEY GARNER: I try to focus on things I can control. I can't control the market, but I can control how I interpret and react to the price action and the chart.
And so far, the chart is telling me, as long as 4,270 holds in the S&P, things should get a little better from here. Similarly, in treasuries, I think treasuries selling that we saw over the last week or two was capitulation. And what that means to me is people were selling out of necessity because they had to, either they were on margin call, they were desperately hedging their cash portfolios, or they just couldn't take the pain anymore, as opposed to for fundamental reasons because I don't see any real good fundamental reason to sell treasuries at these levels and these high yields.
So with that in mind, if we get a reversal in treasuries, like I think will happen, that's going to be positive for stocks. The level I'm looking at in treasuries-- I happen to follow the 10-year note futures so hopefully some of your followers are charting that-- the number I had in mind weeks ago was 107 if we got capitulation. And yesterday's low was right above 107 on that futures contract.
So, to me, everything looks like things could get better from here. I mean, we'll know in a couple of days. And if Washington screws that up, we'll have to rethink things. But for now, everything looks A-OK.
J.D. DURKIN: And Washington never screws anything up, so we'll see how that plays out. I want to get your take here on gold, a bit of lackluster price action as of late. Do you think a shutdown has any impact, Carley, about creating maybe more of a safe-haven demand for something like gold?
CARLEY GARNER: I think the chaos and uncertainty in DC is definitely going to offer some sort of floor in gold. The interesting thing is gold's had a bit of a wipeout here in the last week or so. We've been talking about December gold getting to $1,870 before we would be bullish in this market or at least willing to put our money where our mouths are. And we finally saw that yesterday. It took a long time.
We've been talking about this-- in fact, when I was in New York and talking to you over the summer, we mentioned that level. And I mentioned it on Mad Money, and it finally arrived. Now there's no guarantee that that support level holds. But I think there's a really, really good chance that gold probably had some sort of a capitulation low, along with treasuries, yesterday. And the path of least resistance is probably higher from here. Whatever goes on in Washington is probably just icing on the cake.
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