In the spirit of the season, this evening I am heading off to the local theatre to help set up for a production of Nutcracker, so I'm going to do a post early and be done for the day.
What strikes me about the market right now is how NON-seriously people are taking the fiscal cliff. The assumption seems to be that there is a 100% chance that this thing is going to get solved just fine 'n' dandy, and not only that, but gee willikers, when an agreement is made, it's just going to be darned great for everybody.
Untrue. The digging-in-of-heels we are witnessing may continue for months, and when a deal does come through, it's going to suck out loud for a lot of people. Taxes will go up. Government "investments" (pfff!) will go down. And if they announce some kind of can-kicking "down-payment" miniature plan, I promise you, I'm going to throw up on live television.
Looking at last year – – when we were trillions less in debt, and the politicians had a huge exit door to run through so that they didn't really have to reach an agreement – – the market actually seemed pretty sensible:
Today, though, we are only getting teeny little hints of weakness. Today's bearish engulfing pattern, seen on many indexes, is somewhat heartening.
The Russell 2000 was very strong during the absurd second-half-of-November bounce, but the trendlines suggest we're out of gas.
Some indexes are sporting pretty clean-looking H&S patterns, such as the NYSE Composite.
Miners in particular have been consistently weak the last few days, but the real fireworks will begin if we can break that trendline.
All I can say is………the analog below is one I'd really love to see pan out! It sure would make things easier on the downside. See you Tuesday morning.