The good news today is that the lack of progress on a fiscal-cliff agreement didn't hurt the market. The bad news is that nothing else happened, either. It was an extremely slow day. Market players did little and stocks drifted around the flat line most of the day. It is obvious that the fiscal cliff issue is pushing many folks to the sidelines and it is making for painfully slow action.
I don't have to tell you that the focus all week has been on the fiscal cliff. But the market seems to be more accepting of the fact that the political process has to be played out and isn't reacting as much to each new event. It barely moved today as President Obama and Speaker Boehner made comments.
What we have is a routine progression of political negotiation. It starts with expressions of goodwill and optimism and moves on to name-calling and complaints that the other side's offers are a joke. The animosity should continue until close to the deadline when some sort of deal, which probably kicks the problem down the road, is finally made. Most everyone seems to expect a deal and that is why the market is holding up well.
The big question going into the final month of 2012 is whether the trading action improves or continues to be contained by this tiresome political debate. It is all we hear about, and it is obviously affecting the energy of the market.
In addition to the fiscal cliff, we also have tax-planning issues that may undermine the typical positive seasonality that occurs into the end of the year. Usually there is no reason to take gains on winners, but that may not be the case this year.
I'm hoping we see individual stock-picking work better in the weeks ahead. Unfortunately, stock-picking was tough this week, with a very narrow group of stocks attracting traders. If you weren't highly selective, you likely made little progress. The only way to deal with a market like that is to keep plugging along until things work better.
Have a great weekend I'll see you on Monday.