Market reverses on Fiscal cliff hopes
Stock have been sliding down for the last four sessions making it a case of hopelessness, but again when the sentiment gets very negative there is always a rally. It did happen today. SPX plunged well below the 50 day line and most major stocks went with it. AAPL hit the 505 level for the 3rd time in last six weeks and GOOG dipped below the 700 mark during the sell off. But than came the news that the Congress will convene on Sunday evening and there are possible offerings of a Fiscal cliff deal. That took the indexes up and ignited the upward move. It is hard to be long here and very risk on the short side. The move surprised short sellers and in the last half hour there was lots of short covering.
If there is some resolution to the Fiscal cliff climate the market will ignite and go higher. Meanwhile it often pays to stay in cash and watch from the sidelines unless you have position which you may have to play the defensive game.
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