Dull as Dishwater

 | Dec 07, 2012 | 8:24 AM EST
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A little rudeness and disrespect can elevate a meaningless interaction to a battle of wills and add drama to an otherwise dull day. --Bill Watterson, The Complete Calvin and Hobbes 

The most significant thing about the market lately has been how boring it has been.  The market has had a positive bias as players are afraid of missing out on a 'fiscal cliff resolution rally' but it has been lacking in drama and painfully slow.

From the perspective of the media it is always a cause for celebration when the indices are green but from a traders standpoint this market has been a pain in the neck as it offers so little opportunity. Frankly it would be better if we had some downside action as it might cause more emotion and more movement.

As I've previously mentioned, I am at a bit of a loss as to how to deal with this market's behavior. I'm itching to put money to work but all that I can find are small, very short-term trades. You can play the volatility in a name such as Apple (AAPL), which seems to be the approach of about 80% of traders, but, otherwise, you are relegated to catching some quick pops, which require looking for exits when there is no follow-through.

We don't have to look very hard to find the reason for this action. It is all due to the fiscal cliff problem. The market is quite sanguine about it and quite confident that a deal will be made. That keeps the buyers under the market and prevents any real downside. The bears have had almost no success lately as even shallow selling quickly brings in some dip buyers.

Even though many market players are optimistic about a resolution on the fiscal cliff, they are hesitant to be too bullish. While many anticipate a fiscal cliff deal, there isn't much confidence that there will be a really meaningful solution to our fiscal woes. We'll apply some bandages and then continue to run up even more debt and dig a deeper hole for ourselves.

The other thing that is holding us back is concern that we are heading for a double-dip recession. The media love the scare stories about how we are doomed if we go over the fiscal cliff but the market's fear is that we will still have some major problems even if we don't.

Third-quarter earnings reports were pretty much a disaster and there are few signs that the fourth quarter is going to be any better -- especially since this fiscal cliff negotiation is forcing businesses to delay plans. There is very little clarity out there and it is having a chilling effect on business.

We have the monthly jobs news this morning, which is sure to be blamed on Super Storm Sandy if it is light. I'm not sure how much it matters with the fiscal cliff debate hanging over us, but it might shake things up a bit. It is as dull as dishwater and we have little choice but to keep slogging along. 

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volatility is quite low here, and we could see some downsides here in the short term. ...



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