Killing the Mood

 | Dec 11, 2012 | 4:30 PM EST
  • Comment
  • Print Print
  • Print

There wasn't any particular reason for it, but the market was in a pretty good mood until Senator Harry Reid killed the upbeat action. Reid commented that he doesn't expect a deal by Christmas and that the Democrats have no intention of naming any specific spending cuts. The market has ignored most of the public posturing lately, but these comments were shrill enough to kill the positive mood.

I suspect the upbeat action may have been due, in part, to hope of something friendly when the FOMC issues its interest-rate decision tomorrow. It is generally anticipated that Operation Twist will be replaced with outright purchases of mortgage bonds. The market loves those cheap Fed dollars and usually reacts favorably when Ben and his Merry Pranksters crank up the old printing press.

The bearish thesis is that the market has run up a bit too much and there's no really positive news. We have stuck our head in the sand while we focus on the fiscal cliff debate and, eventually, we will have to deal with the reality of a very tepid economy.

The market has decided it isn't going to worry too much while there are still indications that a fiscal-cliff deal will be made. As I commented in my prior post, if we are close to Christmas and still don't have a deal, the market is likely to become very nervous very quickly, but we still have nearly two more weeks and optimism will likely stay high even though politicians like Harry Reid are likely to keep blathering.

Fear of being left out as the market runs higher is overwhelming all other fears and worries. These moves often continue longer than seem reasonable.

Have a good evening. I'll see you tomorrow.

Columnist Conversations

We will take off some more risk, bank some winners SOLD PG OCT 90 CALL AT 3.3 (in at 2.90) ...
After a very calm and sedate period of volatility which saw the VIX fall not only to all time lows but had a r...
today is a good day to lighten the load and take some positions off the table. SOLD WB OCT 85 CALL AT 11 (i...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.