Shortly after the house voted for the tax cut extensions the president said, "We can't not pay bills that we've already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic, far worse than the impact of a fiscal cliff."
This statement should give a clear direction to investors and traders about the next wall of worry. There is still a strong group in this country that supports a fiscal policy for our government that avoids consequences that are similar to Greece.
Modifications are needed in the ages of recipients of Medicare and social security in order for the programs to not be funded by the general fund of the government. Democrats are opposed to such changes.
In addition the sequestration that would bring trillions in spending cuts to defense and other programs has not been settled. All of this combined with the government's credit card being maxed out brings us to a time when the market could have significant turn with these events not being worked out properly.
Even with these events working out, is there something else that could push the world over the cliff? How about a war with Iran?
For those that are chartists the chart above is significant. The potential pattern shown is one that is known to most chartists as one that would be expected with a significant event.
This is the same pattern that occurred at the high in the S&P in 2007.
And at the double top high in 2000 in the SPX.
For now don't worry, be happy.