Once again the indices danced around on comments from politicians about the fiscal cliff, but each time we've seen less and less of a reaction as market players come to realize it is all meaningless posturing. The market is optimistic that a deal will eventually be done, and it is smart enough to realize that the interim comments aren't indicative of the actual progress.
Nonetheless, there is little else driving the market right now, so we are going to see reactions to any and all news about the fiscal cliff. At this point it's probably best to not overreact, but it sure can mess up a trade if you are caught by the wrong news at the wrong time.
I'd like to provide some profound insight here, but it really is just a market for short-term trades and little else. The market is a bit technically extended, but the bulls have the momentum and small-caps are acting well. It is a good time to stay focused on individual stock-picking.
I'm looking for more speculative action in some of the lower priced "junk" stocks. China HGS Real Estate (HGSH), for example, has moved very nicely. I also have China Auto Logistics (CALI) on my radar here. Action in those sorts of stocks tends to occur when the big picture is muddled, and when traders are anxious for some action. I see little else to do, so I'll be looking for some trades in the junk names.