After the last few days of worry and clammoring in the market, we expect to see a correction to the upside over the next few days and while not linear, into the next few weeks.

The Republicans are already saying that they are willing to reach a compromise on the debt for ‘more spending cuts’ down the road. Essentially, getting the current administration to agree that they will take steps to reduce the deficit in the long run to extend it now. This is a joke, not only will it not happen but its a way to not have to deal with problems today.

For the market however, it’s a positive. In the short term, 1-2 months – this is a good thing. Investors will be relieved of any disasters and with Yellen as Fed chair, most will be expecting heavy bond buying until 2014.

We think the downturn in the market was mostly small retail, unsophisticated investors and the ‘smart money’ expects 300-600 points of upside over the next 6-8 weeks. Again, remember, the 14,700 mark on the Dow Jones has MAJOR support, so a break in that level would be a sell signal. Further support here is very bullish.

Banks and money managers have been scrambling to get rid of their Government debt and using options to hedge against a default. They’re a day late and a dollar short. The story here is not the debt ceiling, but the underlying sickness to our economy, inabilty to find growth, the un-free market controlled by monetary manipulation and the changing landscape here in the US. Major institutions that have been purchasing once invincible government debt over the last few months haven’t been able to see that that’s an antiquated method. It shouldn’t take an investment guru to see that an entity running quarter over quarter/year over year deficits/with frivolous spending habits is not someone you want indebted to you.

That day is gone. The game has changed. Change your strategy or die with it. Listen, I’m not a doomsdayer but this is common sense… making decisions based on facts. While we have a short term window for upside, the issues plaguing our economy that have been developing for years/decades should be a major factor in wealth planning.