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The deadline for the “fiscal cliff” is quickly approaching, and Congress has yet to present a deal.However, Friday and Monday saw big rallies in the stock market.
And some people are attributing it to optimism that a deal will soon get done.
But where is this optimism coming from?
Art Cashin, UBS Financial Services’ director of floor operations, has an explanation.
From this morning’s Cashin’s Comments:
Washington Ghost Town Allows Cliff Resolution Hopes To Flourish – The story of Monday’s trading was short and simple. By Friday morning the U.S. markets were the most oversold they have been in months (and by some metrics years). Friday’s mid-day short covering rally rush did not erase that oversold by any means. Monday morning saw European markets rally broadly. While it was mostly catch-up to Friday’s rebound in the U.S., many media pundits portrayed it as new optimism in Europe. Best of all no one in Washington was throwing rocks at the “conciliatory” beginning of the Fiscal Cliff talks. That was primarily because there was no one left in Washington to throw rocks. But – no rocks is no rocks. Stocks opened sharply higher and held those gains as the day wore on. Late in the day, there was a protracted battle in the 1382/1385 resistance band in the S&P. As the bell was about to ring, the bulls punched through (high 1386) but there was no time left to follow through. A solid rally on so-so volume (circa 710 million).
So, maybe Cashin’s right.
SEE ALSO: The Ultimate Guide To The Fiscal Cliff >
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