Tuesday, November 27, 2012

Fiscal Cliff chaos looms

I'm composing this brief post to acknowledge to my readers that I made two bad calls in my commentary this past weekend:

1.  I stated that we would see a follow thru rally piggy backing on the surge we saw in stocks last Friday.  As of yesterday's close I felt confident that we could still see that rally today.  But it was not to be.  I fundamentally misread the sentiment out of Washington. 

2.  I explicitly made the statement that our political leaders were sensitive to the market gyrations they could create by their statements.  Well, Harry Reid and Mitch McConnell proved me wrong on that score as well. 

Mr. Reid castigated the Republicans for talking nice but doing nothing (someone should remind him he's Senate Majority leader which means he's supposed to lead ... duh!).  McConnell threw more fuel on the fire when he intimated that the Dems should cease the election rhetoric . 

And to add to it, CNBC interviewed a clueless congressman from Arizona and when Michelle Carruso Cabrera pressed the congressman on a possible compromise in the negotiations the idiot could only repeat the Democratic mantra that higher income folks taxes had to be raised.  You could watch the drop in the S&P by the second:

The ten minute chart of the S&P 500 SPDRs (SPY) tells the story better than I ever could:

(click on chart for larger image)
I repent of my naivete and we're in for quite a ride before Christmas.  Forget about a Santa Claus rally unless both Republicans and Democrats come to their senses ...