President Barack Obama's State of the Union speech Tuesday could drive market focus straight to the next skirmish in the budget and deficit battle with Congress, depending on his tone.
Traders are watching to see how the president addresses the "sequester," or the automatic spending cuts that would kick in after March 1, if there is no action by Congress to stop them.
"I think we're going to see more of a line drawn in the sand on sequestration," said David Gilmore of FX Analytics. "It will be interesting to see where he is on reducing the deficit. I think we've learned about the fiscal cliff is stuff happens at the last minute. Can kicks should be expected. There's no reason for suicide watch when it comes to fiscal policy."
Sitting with First Lady Michelle Obama while the president speaks at 9 p.m. ET., will be Apple CEO Tim Cook. Cook has a big speech of his own earlier Tuesday, when he appears at the Goldman Sachs technology conference at 10:15 a.m., and will no doubt be bombarded with questions about how Apple plans to share its cash pile with shareholders.
(Read More: With Apple CEO in Attendance, Obama to Talk Jobs in Address)
Apple has been an even bigger focus than usual for stock traders, who focused Monday on the idea of an Apple watch. The company, in an usually forthcoming statement, said last week that it was in active discussions about returning additional cash to shareholders. The company made the statement in response to hedge fund manager David Einhorn who is fighting Apple over a plan to make it more difficult to issue a dividend paying preferred.
"It was a Herculean thing for them," said ISI analyst Brian Marshall, of the Apple statement. "They don't usually comment or say anything. In my view, we're going to get a bump to what they said." Marshall was speaking on CNBC's "Fast Money."
"This is a company that grew double digits for so long and now kind of just slammed on the brakes very quickly. I don't think demand for Apple products went away overnight…I think they're going to continue to grow but clearly this is a much more of a value story going forward," he said. "I think they realize what they need to do. A $300 drop in the stock woke up a lot of eyes in Cupertino. I think they want to do what's right for their shareholders."
State of the Union