Ever since a miracle Fiscal Cliff deal seemed priced-in at
S&P 1440 last week, the default script has been "when in
But as most large portfolio managers are enjoying some holiday
time away from the markets, we are not seeing wholesale selling
just yet. It's a few cautious players and very active bears who
can push stocks down with ease right now.
And the bears can easily be forced to run for cover when
there's the slightest whiff of a deal in the air, as the House
announcing they would reconvene on Sunday seemed to imply.
So how significant was that 1%+ late day reversal yesterday?
It was not as impressive as we like to see to indicate strong
hands taking control of stocks again. The close was still lower
and still stuck in a resistance zone below S&P 1420.
And more importantly, today would need to see follow-through.
Well follow-through will be hard to come by today, with S&P
futures down 8 handles at 8:15 am ET this morning.
It seems that waiting all day to hear the results of a special
3 pm meeting at the White House with Boehner, Pelosi, McConnell,
and Reid is more than this market can stomach right now.
Especially when it seems that going over the Cliff is really in
their best plans anyway.
As I suggested elsewhere this morning, many investors just
want this political theater to be over so they can get back to
the business of investing. Whatever the tax and government
spending policies are going to be won't affect their view of a
healthy US economy very much.
The key for them is just to get policy out of the way and
restore some certainty and credibility to our nation's
governance. If that takes another 2 to 3 weeks, the consequences
probably won't be pretty.
Speaking of the economy, many eyes will be on this morning's
release of the Chicago PMI. This gauge of business activity has
been hugging the 50-yard line for months, indicating that
corporations have been cautious ahead of the Fiscal Cliff.
The standout component last month was New Orders slipping 5
points to 45.3, a level of contraction not seen since June 2009.
Due for release at 9:45 am ET, today's consensus expectation for
the headline number is 51.
Also on the schedule is the Pending Home Sales Index at 10 am
For better or worse, most investors will continue to sit on
their hands today. Monday is the last trading day of 2012 and it
should be a lot more "lively" as it reels from the effects of
today's meeting with the President and Sunday evening's special
Pending Home Sales
is scheduled for release today at 10:00 AM EST, and is expected
to increase by 1.0% after increasing by 5.2% in October to
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