[Chart courtesy of MarketWatch.com]
As I mentioned yesterday, increased market volatility is pretty much guaranteed to stay with us, and swings in either direction will depend on the latest announcements as to any progress in the fiscal cliff negotiations.
That’s what happened today, as the indexes yo-yo’d up and down depending on who was making a speech or giving the latest assessment. Comments were conflicting, as was to be expected, with early market gains being wiped out and then re-gained later on in the session.
When all was said and done, today had turned into a risk-on day with the S&P 500 adding some 6 points while bonds and treasuries headed higher as well. The mood on Wall Street was slightly bullish, despite the choppiness, as worries about missing the rally superseded the fear of losing money. Hope is a powerful thing, as traders are supporting the view that “the fiscal cliff will be resolved eventually.”
It’s madness at its finest, since any sudden disagreement among the (un)compromising parties can put this trend in reverse along the lines of what we’ve seen just a couple of weeks ago.
Recently, the S&P 500 has gained some 5% after the mid-November sell off, which took it down by almost 8% following the elections. I think it pays to be wary that a repeat performance is a distinct possibility should the battling parties harden their respective fronts.
According to newly released data, the US recovery grew faster in the third quarter than initially thought, however, business and consumer spending was revised downward, which is a sobering reminder that the economy continues to have underlying weakness.
With the markets inching higher, our Trend Tracking Indexes (TTIs) followed suit with the Domestic TTI now positioned at +2.23% and the International TTI at +4.67%.
The funny (and sad at the same time) quote of the day comes from none other than the now infamous Jean Claude Junker, primary EU mouthpiece and Prime Minister of Luxembourg, who uttererd the words about a year ago that “when it gets serious, you have to lie.”
His latest bon mot is this one, which succinctly describes politicians on all continents: “We all know what to do, we just don’t know how to get re-elected after we have done it.”
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