All this fiscal cliff nonsense makes me look back to early summer when our razor blades, tourniquets and Zanax were at close reach. Greece was leaving the Euro, riots in the streets, we were beaten to death with Spain's 25% unemployment rate. Merkel was playing hardball and we were at gates of the Apocalypse. "Kick the Can" had become the obnoxious buzz phrase that we all hated so much.
Around this time, the S&P broke its 200 day moving average on June 1, stayed there for about two days, Draghi happened, and we started a rip of about 200 point. See chart below.
The same will happen here. We will get "The Headline" that something got done. It may not be perfect, it doesn't have to be. The market just wants the uncertainty to go away. Remember that a bad "known" is better than an unknown good.
Are things that bad that we have to go back and retest those lows in June? That would suggest a move back to 1270. I doubt it happens, my worst case is 1320-1330 and I'm not so sure that will even get hit.
Fear and greed, red and green is what its all about. No one will stay deeply long in a treasury trade for more than a month. The risk money is temporarily playing hide and seek, but it will come back soon, it always does.
So chill out and buy em' when they're cryin"