Market Thought... degree of pullback

IMO, with the established stability of Europe, the Fed's policy creating some certainty (for valuations to be established) and US housing firmly rebounding, the question no longer becomes if the market will rally.

The question becomes how severe will the pull backs be?

The markets are fairly overbought, the VIX/SP500 overlay is at a low again and the 10yr yield is at a resistance level.

The scenario favors a consolidation/pull back.

My internal debate of the pull back is between the 14SMA or the 38SMA. I suspect the 14SMA, but the one thing that can take us to the 38SMA is if the "fiscal-cliff" debate gets to "douche-bag-level" if the Republicans want to spike President Obama.

As of now, the chatter has been very market friendly as Democrats and Republicans are seemingly working together. The reason I worry about this (at least somewhat) is because Romney had the douchebaggery to claim $200,000 to $250,000 income is considered middle class! I don't know what Romney is smoking, I wish I did, but a politician to be so out of touch is simply dangerous. And we got plenty of those out of touch schmucks in congress and the senate.

(For those living in NYC (or other major city in the US) that think 200-250K not enough to live very very comfortably, move or change your lifestyle. I lived in NYC while making a little north of 100k including salary and trading, and I lived comfortably.)