Stocks Wary of Fiscal Cliff

Stocks keep falling. The Dow has dropped for four weeks in a row, the NASDAQ for six. The fall reflects worries about the approaching fiscal cliff of expiring tax cuts and mandated budget cuts timed for January 1, 2013. Stocks rose slightly yesterday on positive words coming out of a White House meeting between the president and congressional leaders.

Our FOX Index (see chart), which tracks the distance from 15,800, the “healthy” market minimum total of a Dow of 12,000, an S&P 500 of 1,300, and a NASDAQ of 2,500, is now about to slip below 1,000. On September 14, it was at its all-time high (the index is 5+ years old) of +2,443. Its fall in just two months now takes it to about 40% of its earlier peak, though it remains in healthy territory.