Fiscal Cliff Worries Year-End Markets

Only a few days remain for the U.S. markets to sell off because of fiscal cliff worries. There are actually just two. Volume will be light because so many traders have gone on vacation. Sometimes, thin volume magnifies fluctuations. The markets are in for a wild ride.

The S&P 500 has traded down most of the past five days, with a recovery at the end of the period. Rumors of détente between the White House and congressional Republicans encouraged traders, but the chance for cooperation yesterday turned out not to be true. The president will meet with congressional leaders today. If the meeting ends without a hint of a solution, markets will sell down at a torrid pace.

Those investors who have taken time off will be left to do their selling on January 3, when the rush to ditch the markets could increase with the volume created by the rested and tanned crowd.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Index, Politics