Stocks Drift—Is it the Fed or the 'Fiscal Cliff?'

Scott Eelis | Bloomberg | Getty Images

It's likely a little of both, but we have a clear history recently of "sell on the news" with the Federal Reserve.

Remember, the S&P 500 peaked at a 4.5-year high on September 14th, one day after the Fed meeting. Traders had bought into that meeting, and they did not disappoint, announcing more stimulus, right on the heels of the European Central Bank's announcement of its open bond buying program September 6th.

They bought right into the Fed meeting, and sold right after it.

(Read More: Why the Fed Deserves Credit for the Recovery)

And they are doing it again. The S&P hit a two-month high going into the meeting, and soldff right after it.

Scary that an additional $45 billion in monthly buying of Treasurys from the Fed doesn't get us more bang for our buck, isn't it?

(Read More: Junk Bonds: The Next Bubble to Burst?)

Elsewhere:

Worried about inflation? Yesterday's pop in bond yields, and some attendant discussion in inflation fears, has prompted requests on how to use ETFs to play the inflation game in 2013.

This game - the inflation monster - has not had any success in 2012, but for those truly concerned, here are five suggestions:

1) SPDR Gold Shares. Gold is the classic inflation hedge.

2) PowerShares DB Commodity Index. If gold is too narrow for you, the DBC provides exposure to 14 of the most heavily-traded physical commodities in the world., including oil, gasoline, heating oil, gold, sugar, corn, copper, soybeans, and zinc. Commoditiesshould perform better in higher inflation.

3) PIMCO 1-5 Year U.S. TIPS Fund. Short-term Treasury Inflation-Protected Securities (TIPS) have a high correlation to inflation.

4) ProShares Short 20 Year Treasury. This popped yesterday. You get the INVERSE of the move in the price move in long-term Treasurys; so if long term Treasury prices were down one percent in a day, this gains one percent - but note this gets that return for a single day and will not necessarily track the inverse of long-term Treasurys over a longer period.

5) Powershares Senior Loan Portfolio. Relatively new ( a little over a year old), this owns short-duration institutional loans....so if inflation goes up, rates on these loans rise...this is an interesting way to play against inflation.

(Read More: Shorting Bonds Will Be Big: Dalio)