The most interesting thing about the action today is that no one really said anything new. We simply had some repetition about how important it is to make a deal to avoid the fiscal cliff and some vague comments about willingness to be flexible.
It may not be substantive, but that was all that was needed to light a fire under the market. Clearly, market players are optimistic that a deal will get done, and they are nervous about missing out on the inevitable rally that will occur when it happens. Thus they jump in at even a hint of progress, although it really is nothing but a negotiating ploy by both sides.
The difficulty is that while we are celebrating at the moment, you can bet that we will have a setback again very soon when a deal isn't made and the politicians start blaming each other. It sure looks like the market is going to keep dancing around as this negotiation plays out and nothing much else will matter.
I'm a bit frustrated that I don't have more going on, but it's a market for intraday flipping and little else. If you catch the move, you can't hang around for long. In fact, just buying weakness and selling strength on an intraday basis is about the best trading strategy to employ right now. Forget holding anything -- just make sure you flip them.