\North American equity indices and most sectors found resistance on December 18th and will struggle until the Fiscal Cliff issue is resolved. Significant gains prior to resolution of the “Grand Plan” are unlikely. Thereafter, upside prospects are significant. However, significant capital is unlikely to be employed in the U.S. economy until Fiscal Cliff issues are resolved. A short term resolution prior to a “Grand Plan” could set the stage to take profits in a wide variety of seasonal trades that are at or near expiry.
The VIX Index responded to greater uncertainty about the Fiscal Cliff. It jumped 4.88 (27.35%) last week. The Index remains above its 20, 50 and 200 day moving average. Its intermediate uptrend was confirmed when the Index decisively broke resistance at 19.65
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