I did not even see the debt down grade until about 730/745PM on Friday night. Going out of the session Friday I thought we were potentially a little extended and could potentially use some handle/consolidation. When I saw the downgrade things were down pretty strongly but on light post market volume. I decided to just see where things open Monday. I wanted to separate this from my core report as I sort of view it as potential noise. In looking at the previous debt downgrades I feel like the market just did what it was already setup to do.

I pulled the below from ChatGPT. It shows the S&P downgrade in 2011, the Fitch downgrade in 2023, and the Moody's warning in November of 2023. In all three instances I feel the market acted in alignment with the present (at that time) character of the market. That sort of makes me think the market will act according to its present character, which I will review in the full report. Lets look at these instances to start.

August 5th, 2011-This basically occurred during the European debt crisis. I was trading as an international arbitrage trader at the time and markets had already been extremely choppy and volatile at the time. We were basically in a year of hell for swing/trend trading as it was a year of chop/volatility. It all was taking place near the top of the Lost Decade (2000-2010) base and when it resolved we exploded out and started a huge run. I put an arrow on the date of this downgrade and it was closed to the low of the year in 2011. The markets had already been choppy all year and they remained choppy. The news did nothing to effect the character of the market from my perspective.

August 1st, 2023-In this instance we had gapped down off the highs in mid-July, pulled into the EMAs and rallied back to NOT fill the gap down. We had a distribution candle on a gap up, and inside bar, and then two spinning tops that showed a lacked of buyers. The news triggered a Wedge Drop that started a multi-month consolidation. Overall, I look at this and the market was setup to have a Wedge Drop/lower high and this news was just the catalyst. Once again, the market seems to have played out the scenario it was already set up for.

November 10th, 2023-The market had triggered a long signal at the start of November and had traded to the top of this large triangle pattern. The Moody's news came out and not only did the market not sell off…..it put in a kicker candle and broke out leading to an extremely strong trend higher. Once again, I think the market acted in accordance with how it was already set up.