(This is Mark Vickery substituting for Sheraz Mian while he is away.)

Say goodbye to 2012 -- an occasionally volatile but modestly successful 12 months overall, even if Congress' apparent impotence in the face of the coming Fiscal Cliff has hacked away at that perception over the past couple weeks. The housing market has predictably gained traction, businesses are still sitting on giant mounds of cash and financial institutions look to be on much firmer ground.

That said, Friday's Dow fell 158 points, the 5th down day in a row, and markets were lower across the board. The VIX volatility index has spiked and fear gauge has been rising since word was announced that the congressional compromise to keep from going over the fiscal cliff was likely to fail.

Developments over the weekend and early today seem to indicate Congress' willingness to come to a patchwork, kick-the-can deal at some point this week. Call it building a long diving board over the edge of the cliff. Surprised?

So let's not belabor such matters on this holiday-shortened trading day. We're seeing futures roughly flat in the pre-market -- a vast improvement from they were just a short time ago this morning. Could it be that reports of staving off the cliff are helping recover positive sentiment? Or are investors merely locking in some attractive buys in the wake of our holiday season mini-bear market?

Friday's good news was clearly eclipsed by Fiscal Cliff fears, so perhaps we should take a second look. The Chicago PMI reached 51.6% in December, the best performance in 4 months, and higher than the 51.0% expected. Its most negative number was employment, which fell from 55.2 to 45.9, likely on fears about the fiscal cliff.

Also, Pending Homes Sales from the National Association of Realtors is now up for 3 months in a row, to their highest level in over 2 1/2 years. This helps bolster the positive story regarding the housing market, which is expected to continue improving in 2013.

We here at Zacks wish you all a happy and healthy 2013, as well as tremendous success in your investment endeavors. See you next year!

Mark Vickery
Senior Editor

Zacks Investment Research

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