The Supreme Court blindsided the markets by upholding the individual mandate and mostly keeping Obamacare intact. This was probably the least expected outcome given the tough questions many justices were asking during oral arguments. But this might not be all bad for the markets because this is a definitive resolution to Obamacare and virtually eliminates all uncertainty by ending the health care debate. The market now knows what the rules are and can move past this issue. The markets deal with bad news far better than uncertainty, so this is most likely better for the markets than reopening the health care debate.
The markets opened lower on Euro concerns and then plunged on the Court’s ruling. But after a sharp sell-off, the markets recovered a good chunk of the Supreme Court’s plunge and is getting back to the early morning’s levels.
It is less clear on where the market is headed because we are in the middle of the previous rally’s range. At this point we could go either way since sentiment is fairly balanced. I still expect the market will continue lower, but it really is a coin-flip. The last few days shook out a lot of shorts that piled in on Monday’s sharp sell-off. We’ll see if Tuesday and Wednesday were part of a reversal higher, or simply a head-fake to shake out momentum traders. We’ve already given back all of Wednesday’s gains and half of Tuesday. Another few points lower and we’ll be making new lows.
Some of the biggest movers are obviously health care stocks. But the ruling has different implications for different sectors depending on if they were helped by or hurt by Obamacare. Insurance companies are down, but hospitals and other healthcare providers are up because they benefit from the larger pool of insured.
Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.