Another day of selling hits the markets, but at least we did not see the high volume Wednesday ushered in. The NASDAQ dove below its 200 day moving average yesterday and the S&P 500 joined the club today. While both indexes appear to be in free fall mode the VIX index closed lower on the day. Fear seems to have sidestepped this market despite the back to back days of big selling. AAPL had an epic day of selling as more than 37.5 million shares were trading with the stock closing just off the lows of the session. This type of action occurs when you have an over-owned stock being sold and it never ends well. Stocks are hinting at worse things to come and despite QE from the Federal Reserve sellers are ruling the day. Talk over the fiscal cliff is just talk as we’ll likely see the proverbial can kicked down the road. This is what politicians do best is kicking the can down the road. The issue really is how much taxes will rise. You can bet regardless of your income levels you will be paying higher taxes next year. At this point the market is simply trying to price the affect of the fiscal cliff. Spending cuts in the bill are roughly 10% of the budget deficit and not likely to be as devastating as the rise in taxes. We talk about not going over the fiscal cliff, but at some point we’ll have to pay for our debts and the longer we put it off the worse it will be. It is no surprise to us we remain in a sell signal even if we think a fiscal deal will be struck. Price and volume action remain the key in this market. We aren’t about to stick our necks out and try and pick a bottom. Yesterday’s dip buyers were hit hard today and losses are not something we enjoy seeing. Judging by the McClellan Oscillator we are in extreme oversold territory with a reading -147 for the entire market. It is not THAT extreme, but in an area where the market is capable of snapping back. A bounce here would not surprise us in the least. However, if we are to bounce we’ll need to see this market confirm a new market rally before we operate on the long side. Guessing when the market will turn would not be a disciplined approach. Perhaps a rumor of a fiscal deal would reverse the trend here, but it is anyone’s guess. We’ll continue to operate in sell mode and stay patient. Have a great weekend!