Hello everyone!
I originally planned to send one more full weekly commentary but I've decided that the remaining time this month is better spent preparing myself for next year. I'm looking forward to 2013 and utilizing some advanced trading techniques I have been studying.
As far as the market goes, the fundamental and technical prerequisites are there for stocks to move higher. We have a weak dollar, promised Fed liquidity, a settled Euro zone and China is coming out of its economic slumber. For equities any move higher will be predicated on a resolution to "the cliff". My commentary last week detailed possible outcomes.
Politically, the Republicans are "damned if they do and damned if they don't". If they don't cave to Obama, the Dems still get their tax cuts when we fall off the cliff and all national polls show the Republicans will be blamed for going over the cliff. If they do give in to Obama it will be a significant political defeat that will hamstring them for the next four years. Many people speculate that Obama is attempting to permanently neuter the Republican Party. Given the outcome of the last election which, to me, showed a significant shift in the country's political climate (driven largely by demographics), the thesis is plausible.
Common sense dictates that, given the economic risks of going over the cliff, the Republicans will give in. But I am no longer so sure that this is a foregone conclusion. We also have the debt limit issue Obama has tacked on to his demands. It's difficult to see the Republicans giving into him on this although there have been other presidents who were able to raise the debt limit unilaterally. Reagan raised the debt limit 16 times without the Congress saying "booh" during his tenure as president.
So, it will be interesting to see how everything unfolds in the next few weeks.
I might send out a short post if something extraordinary happens between now and January 1st but barring such an event my next commentary will be for the trading week ending 1/4/2013.
I want to wish everyone a Merry Christmas and a happy, prosperous New Year!
And let's remember to pray for those parents and families who are dealing with indescribable grief in Newtown, Ct.
NOTHING IN THIS COMMENTARY SHOULD BE CONSTRUED AS AN OFFER OR ADVICE TO BUY OR SELL ANY SECURITIES, OPTIONS, FUTURES OR COMMODITIES. THE OPINIONS ARTICULATED ARE ONLY THIS AUTHOR'S WHO IS NOT A REGISTERED INVESTMENT ADVISOR OR BROKER ... yet!
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