How The Markets Are Reacting To A Looming Shutdown

Good Tuesday Morning, MPTraders!  September 30, 2025-- Pre-Market Update:  

-- Today is the final trading session of September and Q3, 2025... 

-- Today is trading day #187 for 2025. Trading days 180 to 200 have produced the worst returns in the cash SPX on average since 1985. The close on day # 179 (9/19/25) was 6664.36. Yesterday's close on day #186 (9/29/25) was 6661.21, for a net negative closing differential of 3.15 "tiny" points so far during this historically negative period for the big cap S&P500!  

-- No Economic Data today, BUT the growing prospect of a Government Shutdown at Midnight tonight appears to be a done deal. According to Polymarket, there is an 89% chance of a shutdown...

-- NKE Earnings after the close...

ES-- With about 16 hours remaining until the U.S. Government shuts down, the markets do not seem to care much either way, largely because everyone knows that "eventually," and probably sooner than later, the powers that be will arrange a deal, even if both sides have to hold their noses. The fact of the matter is, as the old expression goes, "elections have consequences," and as such, the Republican Trifecta control of the Legislative, Executive, and Judicial branches positions the Conservatives in the driver's seat. 

That said, the last time the Government shut down was in 2018, when the algorithmic trading programs were in their infancy. Nowadays, however, negative headline risk can be much more acute, especially on the final trading day of Q3, and during a timeframe that historically has produced equity index price weakness. 

I cannot rule out a knee-jerk downside reaction to the Midnight news of a Government shut down, despite a 90% probability already baked into the news. If such a knee-jerk negative reaction emerges, my attached Big Picture Daily Chart setup argues for a press that challenges key support from the 20 DMA (6651) down to last Thursday's (9/25) low at 6624.50, which must contain the weakness to avert downside continuation to 6530/50, where the correction off of the ATH at 6758.75 (9/22/25) will approximate 3.3%.

Furthermore, I am thinking that a decline into the 6530/50 area will have the right look of a completed correction ahead of the emergence of a new upleg during the first several days of October...

What if an eleventh-hour deal is made just before Midnight? The algos more than likely will knee-jerk ES to the upside. If strength propels the index above yesterday AM's high at 6736 on a sustained basis, then my pattern work will trigger a projection to new ATH-territory at 6800-6820... Last is 6699.50...