The market is still hopeful for the fiscal-cliff deal, but it is getting a little nervous as the clock ticks down. The indices will likely hold up well for another day or so, as the consensus is that a deal will happen – but the timing of it may trip up the market, which has built up such high expectations. So if we don't have something pretty solid by Friday, I'm looking for the selling to pick up.
This seemingly endless negotiation is making trading very unstable. Traders want to make sure they maintain long exposure in the event of a deal, but are worried about being caught in a selloff if things are delayed or fall apart.
I've sold down some positions Wednesday, even though I'm still finding it tremendously difficult to put some of my idle cash to work. I always want to defer to my money management regardless of the big-picture news flow. If a deal emerges and we see a big spike higher in the market, I'll be kicking myself for not having more long exposure -- but, in the stocks I'm watching, the price action just doesn't support aggressive buying. I'm overruling my gut feeling, which says a deal will hit shortly.