Tuesday Update

My system flatlined today at +1375 which is in nosebleed territory. We technically went over the fiscal cliff but I underestimated the ability of politicians to kick the can down the road if only for a few months. I'm also surprised Boehner retained his speakership. Nevertheless, nothing really has been resolved and we are still in this Q1 deadline for the government whether it is called the fiscal cliff or the debt ceiling or whatever. The markets are not pricing in a bearish scenario and instead are pricing a bullish scenario. The S&P 500 Equal Weight Index is at all-time highs and it would be highly unusual for a bear market to start after such a strong move to +1375 in my system. The S&P 500 should follow the lead of the Equal Weight Index and move above the September high. The bears need at least a move below 1426 to get any momentum going but below 1343 is needed to say the tide has turned against the bulls.