There is an old saying that the market hates uncertainty, and that certainly seems to be the case today. Unfortunately, this is likely to last for a while as the fiscal-cliff debate continues. There are going to be optimistic statements that will bounce the market, but there will be negative comments as well, like Erskine Bowles , who said this morning that he thinks there is only a 1-in-3 chance of a deal.
Weak housing news isn't helping matters and, of course, the technical pattern suggests more backing-and-filling is needed. The SPDR S&P 500 (SPY) has not filled the gap that was formed last Friday morning in a euphoric half-day of trading, but the market is still above the key 200-day simple moving average. It hasn't completely rolled over, but it is close and needs some sort of bounce or support soon.
I've moved to a very heavy cash position and I see very little I'm interested in buying other than an intraday flip.
We should have comments from President Obama later today, and that is going to determine our short-term fate. If he takes too hard a stand, it may be a problem, but if there are signs of flexibility, the market has the potential for a decent bounce.
Trading off news events isn't what I like to do, but there's no real choice.