After two days of flat action we saw a slightly bigger trading range today, unfortunately it was mostly to the downside. The market gapped up to start the week and then traded steadily lower all day. There wasn't any panic or a rush for the exits. It was just a slow and steady drip lower as market players were unable to find a good reason to buy.
Technically, the market became a bit overbought and dealt with overhead resistance, so some selling is probably healthy. The market needs to consolidate the gains of the last two weeks, which, ironically, were created when politicians made optimistic comments about the chances of a fiscal cliff deal.
What was interesting today was that the Republican counter-proposal hardly created a ripple in the action. A very brief move to the upside quickly failed. The market ended up closing at the lows with no real change in expectations for a deal. The market seems to recognize that we are going to go through these negotiations for a while and that there isn't likely to be a breakthrough until we are very close to the deadline.
The action is uninteresting and we'll just have to keep slogging until something shifts. From a trading standpoint, a little panic selling would probably help to shake things up. Unless there is surprise news, it looks like we are just going to continue drifting for a while.
Have a good evening. I'll see you tomorrow.