STOCKS

The shutdown's ending and the US government will reopen, now that a deal with Congress has been reached to extend the debt ceiling until the beginning of February, writes MoneyShow's Howard R. Gold. He fills you in on the direction he feels stocks will head next on the news.

Now that Congress has finally come to its senses and reached a deal to reopen the federal government and extend the debt ceiling, markets are back to doing what they did before—rallying.

In the wee hours of Thursday morning, President Obama signed a bill passed by the US Senate and House of Representatives that will fund the government through January 15, 2014 and extend the debt ceiling through February 7.

If you think we've seen this movie before, you're right—back in August 2011, and again late last year, with the overhyped fiscal cliff.

And if you think stocks are now ready to move on to new highs, you're also probably right.

Markets rallied big time Wednesday, in anticipation of a deal. With default off the table (at least for a few months, and maybe for good, God willing), one more major obstacle to the market's advance has been removed.

In early September, I wrote about five hurdles the market faced this fall. We've mostly cleared four of them: the Syrian crisis, the German election, the appointment of a new Federal Reserve chair, and the government funding/debt ceiling battle.


And the fifth—if and when the Fed starts tapering its $85-billion-a-month bond purchase program—is closely tied to the new Fed chair-designate, Janet Yellen.

Yellen's appointment by the president last week, and the favorable turn in the market's seasonal calendar, are two reasons why I'm giving the all-clear signal for stocks for the rest of the year.

Yellen, in contrast to her chief rival for the job, former Treasury Secretary Larry Summers, who withdrew his name from consideration last month, is a true believer in the Fed's unconventional easy money policy which she helped orchestrate as vice chair.

She may try to soft-pedal that in upcoming confirmation hearings, but her own inclinations came out strongly when President Obama announced her appointment at the White House on October 9.

In his remarks, the president emphasized Yellen's belief in “both sides of the Fed's mandate.” “She's committed to increasing employment, and she understands the human costs when Americans can't find a job,” he said.

Echoing the president, Yellen added, “I pledge to do my upmost… to promote maximum employment, stable prices, and a strong and stable financial system…Too many Americans still can't find a job and worry how they'll pay their bills and provide for their families. The Federal Reserve can help… ensure that everyone has the opportunity to work hard and build a better life.”

NEXT: Don't fight the Fed or the calendar

Tickers Mentioned: Tickers: SPX