Early this week Fed Chief Bernanke was asked if he regretted coining the phrase, “Fiscal Cliff.” Determining that “less” was better serving to the public than “more,” he succinctly answered “No.” Well done Ben…way to be transparent to the peeps.
K, cheap shots at Ben are too easy…have to put “no low-hangin fruit humor” on the coming year’s resolution list….
Fact is that Ben and the brotherhood did give us some clarity that may prove useful in the coming year or so – no rate raising till the economy starts producing jobs and the unemployment rate finds itself in the mid-6 percent range. Actually good to see the Fed get serious about one-part of its duel mandate.
But the Fed move is not the real story here… It remains the drama playing out in Washington amongst the Pols and their inability to put the country first by working together. They’ve played to the cameras and their bases and have effectively stalled this process to the point where it is becoming nearly impossible to come up with an 11th-hour compromise that can forestall at least a partial trigger of the dreaded fiscal cliff tax penalization scheme.
Can they pull it out, and if so, will they? Frankly, who cares at this point! The markets have surely factored the event in…market discounting, as it were. Yet everyone remains on edge… Will prices still crush down if we go over the cliff? Absolutely possible and very likely, despite the fact this is sneaking up on no one. On the flipside, if the hacks in Washington do somehow pull “one” out of the hat, there’s a good chance the markets get run northbound despite the fact many have baked this scenario into the cake and are betting heavily that such will be the case.
What’s the net of all this? Stuck in Tweenerville with the profoundly simply truth that the markets could go either direction or nowhere at all, no matter the outcome of this ridiculous self-made, self-inflicted mess.
The obvious question now is whether the charts are tipping us as to the likely direction this baby is gonna head in the coming week or so? NO…not if you’re simply reading price action, which is the one thing I’ve always believed you can rely on…price is what it is, no matter what you, I or the next guy may hope or interpret it to be.
Truth is the map is painting a very muddled picture. The charts tell the story of broad indices simply churning up the same ol’ ground they’ve occupied for quite some time… reversion to mean activity centered within well established consolidation zones.
Translated…we’re back where we began and have been now for some time! The only clarity is the fact that there remains much stored energy in the tightly coiled broad indices.
So, here we are in mid-December and even at this late stage, as the pressure ratchets up and the clock ticks down, the question remains: Who will prevail and will these indices finally be allowed to exert their stored energy in decisive, tradable fashion, no matter the direction?
We shall see….