Not more fiscal cliff worries surely? Or even hope?

So, the market news has again been dominated by fiscal cliff worries that either go up or down depending on fears of not enough progress being reported, no news at all, or grabbing the occasional statement from a participant that gives a little hope. Markets the last couple of days have been going up on this hope.

Last night US stocks pared losses after Republican Speaker of the House John Boehner said that he was “optimistic that we can continue to work together to avert this crisis sooner rather than later.” He said that Republicans were willing to put “revenue on the table” as long as it is accompanied by spending cuts. 

Furthermore, Obama told the public in a press conference the same day to pressure Congress to act to avert the automatic tax increases, saying: “When the American people speak loudly enough, lo and behold, Congress listens. 

“So today I’m asking Congress to listen to the people who sent us here to serve. I’m asking Americans all across the country to make your voice heard.” 

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=50058&action=news&story_id=20531224

You can, more or less, read whatever you want into these statements. Boehner is basically saying what he has said before, taxes are on the table as long as there is give on spending cuts. No one knows how big a "give" though, or whether the price of Republican support on tax hikes for the rich, means much bigger cuts in more Democratic supported social programs. Obama's appeal to the people can also be seen as a negative, suggesting that he wants to put pressure on Congress from voters to get the deal done. The positive side is that both are still talking sooner rather than later on a deal, but they've only got a few weeks to do it.  After that, no deal and you can be sure that the markets will throw another fit of displeasure and probably head south.

The markets do seem to be in a set pattern of behaviour when it comes to picking the potential crisis as an excuse for the latest sell off.  All of these crises, at least since 2008, never quite reach absolute crisis proportions, but do enough to leave uncertainty, much of it more to do with the markets own fears of what potentially might happen rather than what actually does happen.


So, should you follow the news or just assume that much of it is already baked into the cake? Certainly in recent months the market was at the very least due a down move, charts had been signalling some weakness for quite a while. Resistance points were being hit, indicators looking well overbought, all manner of technical indicators were suggesting falls and a correction, at times it looks like the market needs a news story to justify it.  Take your pick, Greece, Spain, Euro crisis, fiscal cliff, etc and next year it will be worries about the US debt ceiling talks. The charts may tell you this before the actual news story starts to come out. If you don't look at charts at all, then you just might miss it.