Apparently the fiscal cliff issue still matters to more people than just those in the media and in politics: It also matters to the market. There is no doubt that a strong correlation exists between the fiscal cliff news and market movements.
The market tanked after the election when investors began focusing on the looming tax monster that exists at the end of the year; and every time Congress and President Obama have hinted at the 'C' word (compromise), stock prices jumped. Wednesday's words from Washington were a bit warmer and more conciliatory than in recent days so the Dow Jones adds a triple-digit gain. The fiscal cliff seems to also matter to foreign markets because they are rallying now as I write this (Weds evening, 11/28/12), in the wake of Wall Street gains.
I'm not a gambling man but I do like to make guesses just for fun (no I did not buy any PowerBall lottery tickets). My intuitive guess is that Congress will play chicken as long as they can but will make some kind of deal just before the end of the year. Quite possibly, stocks will rally in December or January when investors realize there is at least one more leg up in this bull market, when they are confident that capital gains rates will not go up, and when they discover they have no tax loss harvesting opportunities.
Yes, it's almost time to begin looking at our Where to Invest Now series of articles for 2013 (no I won't recommend buying lottery tickets but feel free to do so if it makes you feel better... and good luck)!