I think that, if there were a definition for the U.S. market today, it would have to be "apathy." But why is it happening? This is the best place to get a return on invested dollars, yet there seems to be no action, no momentum, no trend and certainly no volume of which to speak. Is it psychological? Is something else at work? Something or someone has put a vice grip on this market that is preventing it from moving forward.
Are we seeing fear from an event yet to come? I have a hard time believing that to be the case. After all, the CBOE Volatility Index (VIX), that measure of fear, is sitting under 17%. If anything -- again -- the market is reflecting enormous complacency, and yet the market has fallen nearly 7% from its recent highs.
Of course, there's also the fiscal cliff. If you don't know about it, you've been living under a rock for the past couple of years. It has had more play time in the media than a Lindsay Lohan run-in with the law. We don't know the consequences of going over the cliff, but everyone seems to believe it's all bad. OK, I get that. The U.S has got high debt, with no plan to repay at the moment. All of this stuff is known.
But why is the market unconcerned about it? Could investors and traders still be lurking around for the big rally if or when a solution is announced? As far back as the rubber band has been stretched (Monday was a great example), the market has been well oversold, and it's now deserving of a good rally.
If the participants don't care, don't want to see it or hear it, don't want to invest -- well, we have a problem. Markets move on momentum, and when there is none, the liquidity dries up. That is when the institutions -- which make up most of the action in the markets -- will pack up their toys and leave the game. Then what will be left?
Not a great way to end the year, is it?