We sit just a few points under the 50-day moving average for both the S&P and the Nasdaq as I write this. The market continues to be obsessed with the fiscal cliff. It seems like it doesn’t even require a statement from Obama, Reid, or Boehner to move the markets, a Congressional Page could probably post a Facebook status update and the Dow would shift by 100 points.
While reviewing yesterday’s price action I began to see some very small divergences as traders appear to be shifting a little more towards the defensive/low beta parts of the market, but this divergence is not enough to pound the table on the current short-term rally being over. A bounce to 1420 and the 50-day moving average has not been out of the question and is healthy. Until the fiscal cliff talks are ended, for better or worse, they control each day’s movement, this should be taken into consideration when evaluating a short-term view on the equity markets.
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