I like everyone else has been ear bashed by the notion of the fiscal cliff – that is yet another seemingly childish staring contest by people who are supposedly adults. We have seen several of these this year particularly in Europe where the Greeks and the Germans tried to out dickhead each other before actually being vaguely grown up about things.
However, the question to me is what impact does this narrative fallacy that is the fact that we like a good story have upon the market. Interestingly enough it doesn’t seem to be worry it. Much like the re-election of Obama hasn’t worried it.
The chart below is of the NYSE Cumulative New High/New Low Index and the S&P500
As can be seen stocks within the US market have been making new highs since the bottom of 2009 and have continued to do so for the past three years with a slight pause in the first half of 2011.
It is easy to get distracted by all the talk surrounding markets and this talk is in large part a distraction. From my reading of the trend there are only two important considerations
1. Will the S&P500 trend beyond the 1550 mark – if it does good – if it doesn’t also good….
2. Will stocks within the US market continue to make new highs and support this move beyond 1550.
The rest is just the chatter of squealing monkeys…..