The US deficit plan optimism.

The financial markets are moving ahead of the US budget deficit plan with full enthusiasm and hope but once the plan is being announced,it will become a non-event and the markets will dwindle slowly and painfully digesting the news.
The US lawmakers will definitely have to reach an agreement that will help the nation avoid default and being downgraded to junk by Moody's Investors Services.
Obama embraced a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would combine tax increases and spending cuts, saying it could end a congressional deadlock over raising the U.S. borrowing limit.

The plan is “a very significant step,” Obama said. But there are still resistance from the House Republican.The countdown is now less than two weeks and there's an urgency for lawmakers to intensify efforts for a compromise.This is going to cause a lot of anxiety to the markets.
Time is an essence as the Aug. 2 deadline officials have set for lifting the debt cap.
House Republicans last night passed their debt-reduction plan 234-190 -- legislation that stands little chance of passing the Senate and that Obama has said he would veto if it did. The measure would cut and cap government spending and allow the debt-ceiling to be raised by $2.4 trillion only if Congress approves a balanced budget amendment to the Constitution.
While House Republican leaders indicated a willingness to consider the proposal, they and other members of their fiscally conservative caucus continue to stress opposition to a debt compromise that includes more taxes
The plan also proposes $500 billion in immediate spending cuts including between $85 billion and $202 billion in Medicare and other health spending, $80 billion from defense, $70 billion from education and labor programs and $11 billion from agriculture programs.
Tracking the Dow Tuesday,19/07/11.
Economic news:housing starts,redbook,Thomas Hoenig speaks.
The beginning of July index futures contract.

Asian index futures expiry:8 market days to go.

9:30 am:--Bullish 100.0 points gap up followed by inverted hammer..
Exporters to the U.S. climbed after construction of new homes in the U.S. rose more than forecast in June to the highest level in five months, adding to signs the housing market is stabilizing.
10:30am:--Session high pullback,but holding strongly.
11:30am:--Bearish engulfing to near morning bull pivot support.
12:30noon:--No sign of filling up opening gap,bulls have a fine day.
1:30pm:--Bullish spike up to new session high.
2:30pm:--Ascending bulls,the day's peak being achieved.Graveyard dojis noticeable.
3:30pm:--A usual pullback to the bull pivot support.
4:00pm:--A hammer.
The overall July candlestick is still bullish holding within a body range of 175.0 points which is still at risk.
Tuesday's closing is a mere few points above the month's MAV support line.
Market volatility is still very high in view of the budget deficit Plan A is still not finalized as yet.
Apart from the US,the European budget deficit is yet another hurdle in months to come.
Meantime I suspect the market is under cosmetic short covering.

Gear up federal debt ceiling or face meltdown.

US lawmakers must raise the $14.3 trillion federal debt ceiling,that is raising the legal limit on government borrowing limit by Aug. 2 failing which there will be a financial tsunami that will send ripples to all sectors of the financial world like a domino effects.A U.S. default could throw the economy back into recession and create panic in global financial markets.
President Barack Obama has called for compromise as party leaders seek to craft a deal that raises the legal limit on how much the U.S. government can borrow while slashing projected deficits over the next decade. Democratic and Republican leaders have been meeting, but discussions have faltered over taxes.
If Treasurys are no longer risk-free, then all financial assets have to be repriced against another a benchmark and there will not be any more safe haeven for all assets class.Interest rates on all forms of debt -- mortgages, car loans, government -- will spike, resulting in a renewed credit crunch.
Borrowing will come to a halt. Business will come to a halt. And even more troubling is the possibility that a halt in the flow of credit will cause commercial paper markets to dry up, resulting in a run on money funds.
Meanwhile Moody's Investors Service and Standard & Poor's both threatened to downgrade U.S. debt which was announced after the market closed.The ratings agency said it was placing the United States' Aaa rating -- its top level -- on watch for a possible downgrade cited "a rising possibility" that Congress and the White House would not agree to a deal to raise the nation's debt limit on a timely basis.
Separately, Standard & Poor's privately has told lawmakers and business groups it might cut the U.S. credit rating if the government fails to make any of its expected payments -- including Social Security checks -- even if it makes all its debt payments, sources told The Wall Street Journal.

Tracking the Dow on Wednesday,13/07/11. Economic events:Import Export prices,EIA Petroleum Status,Bernanke Speaks. Dow futures 2 market days to expiry.
9:30am:--Bullish 40.0 point gap up.

10:30am:--Session high,Unshaven bullish marubozu followed by a bearish inverted hammer.

11:30am:-Morning star and bearish engulfing.

12:30noon:--A double top morning star.

1:30pm:--Hangman at bull pivot support.

2:30pm:--Graveyard doji at MAV support.

3:30pm:--Opening gap being half filled.Bearish hammer.

4:00pm:--Last minute short cover,a bullish hammer at the bearish pivot support.
July mid week candlestick is now a bearish hammer.Pairing it with previuos week will be a bearish harami which is highly risky for an imminent crash.Stocks got an early boost after Beijing reported that China's gross domestic product (GDP) grew 9.5 percent in the second quarter, slower than in the first quarter, but still beating analysts' expectations.
Bernanke fuelled the bullish sentiment on Wall Street when he told the US Congress that the Fed was prepared to renew its stimulus efforts if the country's economy remained feeble.The problem of the debt ceiling affected the markets today. The Dow's big rally stalled out in the late morning and nearly fell apart entirely in the last hour of trading.

Bovespa bargain hunting.

Brazil's Bovespa Index has tumbled substantially and is currently holding below the bearish pivot resistance of 63,318 level.
It's now a very good hunting ground at great bargains.Moving in now at a staggered manner will provide great opportunities when the higher interest rates regime ends.
Brazil’s central bank began raising the benchmark interest rate from a record low 8.75 percent in April last year. The 300 basis points, or 3 percentage points, since then marks the biggest jump since 2005, when policy makers completed a series that added 375 basis points to the overnight lending rate.
Last Friday's index closing at 61,513.24 down 694,09 is still not safe as yet unless the index can sustain above 61,687 level.

Tracking the Dow on Friday,8/07/11(5 market days to index futures expiry)

Economic events:-employment situation,wholesale trade,consumer credit.

9:30am:--nearly 100.0 points opening gap down.

10:30am:--1st hour low,hammering the bottom.

11:30am:--New morning low,bullish engulfing.

12:30noon:--Morning star at the bear pivot.

1:30pm:--Failed to touch session resistance line.

2:30pm:--Pullback near to bear pivot support.

3:30pm:--Ascending soldiers.

4:00pm:-Bullish breakout.

Despite last Friday sell-off which came after the Labor Department reported that the US economy created a paltry 18,000 jobs in June, pushing the unemployment rate up to 9.2 percent,the overall weekly performance shows of a powerful bull in the driver's seat.It's an inverted bullish hammer.

Any intermittent pullback the Dow index will hit the MAV support before it continues its rally.