As we roll into the final days of the year, most people are focused on unplugging and spending time with family. But for traders, it’s natural to start looking a little farther ahead.
And one question I’ve been getting a lot more of lately is: will Washington avoid another government shutdown early next year?
Now it’s understandable why… It’s one of those back-burner issues that will likely take front and center stage on the news networks once everyone’s back at their desks.
It also raises a familiar set of questions about how the markets react and what actually matters when those headlines inevitably start rolling.
So I wanted to spend a minute to walk you through what could happen in the event of more gridlock come January.
Let’s get started…
Q: Tom, my concern isn’t so much whether members of Congress get paid or not, but if they shut down while they work things out, what will that do to the markets?
Good question—and I like how you worked that comment in about who gets paid.
Here’s what history tells us: The markets have generally shrugged off government shutdowns.
In fact, during past shutdowns, the S&P 500 has often traded flat or even higher while Congress was closed.
Now, that doesn’t mean there’s never an impact… In the short term, you could see some added volatility (especially if the shutdown drags on longer than expected). But in the long term, shutdowns on their own usually aren’t disruptive unless they’re paired with broader economic stressors.
In other words, Washington deadlines might rattle the headlines, but they rarely derail the market’s bigger trend.
And ultimately, whether or not it happens and crashes the markets, we’ll be prepared.
Q: Tom, do you make your options trading decisions based on upcoming economic reports?
This is another great question – and one that really comes down to the time frame.
Some traders use economic reports to time 0DTE options. These are options contracts that expire the very same day they’re traded (hence “zero days to expiration” – or 0DTE).
The idea is simple: if the underlying security makes a big enough move after a report, the short-lived option can move quickly in your favor. That’s why some traders look to reports like Consumer Price Index (CPI), Producer Price Index (PPI), or Personal Consumption Expenditures (PCE) Price Index to play intraday moves.
The most common vehicle for this approach is options on the SPDR S&P 500 ETF (SPY) since it’s the most liquid. You’ll also see traders use Invesco QQQ Trust (QQQ) or SPDR Dow Jones Industrial Average ETF Trust (DIA).
But here’s the thing: this is pure day trading. And that’s not where I focus my efforts.
I’m not in the business of rolling the dice on same-day expirations. Instead, I use my systems to identify repeatable patterns and setups with higher probabilities—where I can plan my entry, exit, and targets in advance.
So, while I always keep an eye on the big economic reports, I don’t trade them the way 0DTE traders do.
As always, great questions! Keep them coming by emailing me here at any time.
Talk again soon…
Tom Gentile
America’s Pattern Trader
