The E-mini S&P future initially crashed through its near-term uptrend line and 20 and 50 day moving averages on the news, but quickly regained all of those support levels. The VIX (volatility index) was pricing in this risk during the past week (1, 2). Either way, damage was done to ES tonight. So keep an eye on that uptrend line to see if it holds (watch $SPX, $SPY and ESH13). Congress has 10 days to prevent automatic tax hikes and spending cuts from taking place. If Congress goes over the cliff, it would cause an economy possibly already in a recession to contract even further. That's why the market got spooked tonight.
The White House responded with this statement:
The President’s main priority is to ensure that taxes don’t go up on 98 percent of Americans and 97 percent of small businesses in just a few short days. The President will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy.
ESH13 intraday chart (1-minute)
ESH13 daily chart
ESH13 60 or 30 minute chart
Related article: Boehner Drops ‘Plan B’ As Budget Effort Turns to Disarray (Bloomberg)