The market managed to build on yesterday's sharp intraday reversal, but not without nervousness about the fiscal cliff. Breadth was healthy, leadership came from big-cap technology names and there was strength in small-caps. But the focus remains on the fiscal-cliff negotiations, and the market keeps reacting to every new development or comment.
The reality is that there isn't going to be much progress on a solution for a while, but the market dislikes uncertainty so it seizes on minor news events. Unfortunately, it looks like this is going to continue for a while. The market anticipates that a deal will be done, and will probably continue to price it in with occasional hiccups along the way. We may even end up with a sell-the-news event down the road.
For now, it is a market for individual stock-picking and quick trades. There isn't much edge in building longer-term positions, and with volume and volatility sedate, it's hard work to find trades. That is all the market is giving us, so that is what we have to focus on.
Have a good evening. I'll see you tomorrow.