By Greg Peel

The Dow fell 121 points, or 0.9%, while the S&P lost 1.2% to 1377 and the Nasdaq dropped 1.4%.

The major indices continue to take out technical support levels, which only encourages more selling to then test more support levels. The same is true for Apple, which fell 3.6% last night after having breached the 20% down level the night before.

The sad fact of the matter is that we're going to have to endure "fiscal cliff" talk now at least through to New Year's, and no doubt for some time beyond as well. Apart from driving us all loopy, such talk will only add to uncertainty on both Wall Street and Main Street in the US and thus all around the world. It's not a new uncertainty ? the cliff has been ahead of us all year ? but this week ended hope of a Romney victory for the capitalists and a potential "super-majority" that could pass all bills without challenge, or even a similar set-up for the Democrats, which at least would have ended the deadlock.

In the frame are capital gains, dividend and payroll tax rates, and they have both Wall Street and Main Street concerned. If you weren't in the equity market before, you won't be now if you don't know what taxes you will be paying for your troubles. If you weren't prepared to hire new staff yet, you won't be now when you don't know how much that will cost you. And to top things off, it was assumed a Romney victory would mean the end of any further Dodd-Frank financial market reform malarkey, but with Obama returned, the banks and brokers will be looking at a continuing, drawn out process of greater regulation and hence uncertainty.

Over in Europe last night, ECB president Mario Draghi kept his cash rate on hold at 0.75%. This surprised many given only the night before, the European Commission had slashed its eurozone GDP forecast for 2013 and Draghi had warned of Germany now being dragged under by the euro-debt problem. Well how about a rate cut then, please Mr Draghi?

No! Draghi has hit the ball squarely into the fiscal court. He reiterated for the umpteenth time that OMTs (outright monetary transactions, or sovereign bond buying) are ready as soon as, but not before, any member sticks up its hand for a bail-out. The threat of OMTs are keeping eurozone bond rates down, putting off the need for bail-out requests.

It was also suggested last night that despite the fact the Greek parliament has passed new austerity measures that should clear the way for the payment of its next bail-out tranche, a decision to release those funds may yet take weeks. Why? There's a EU leaders meeting on Monday that would be a perfect opportunity. Once again ? more uncertainty.

Or...we might just recall a suggestion made last month when all and sundry were expecting Spain to pick up the red phone, but didn't. Germany was said to have told Spain to hold off. The suggestion is that because any decision by Germany to contribute to a new bail-out fund or even to endorse the next payment in an existing bail-out has to be first passed by the German parliament, Merkel has told Rajoy to delay until three ducks are lined up in a row ? a Spanish bail-out, the next payment to Greece, and a bail-out for Cyprus. At that point, all three can be put to the parliament in one fell swoop, rather than having to convene three separate sittings.

Another suggestion as to why Rajoy has not yet moved has been that he is waiting for the outcome of the Catalan regional poll, due November 25, which includes a referendum on greater regional sovereignty.

Put this all together, and while we despair over the fiscal cliff, we may just wake up one day to find the European story has suddenly changed substantially. Yes, this would be a complete shock given the speed at which things usually move in Europe, but maybe it's not beyond the realms.

In the meantime, uncertainty reigns. And uncertainty is the greatest enemy of stock markets.

Not so bond markets. Or at least supposed "safe haven" bond markets. Last night the US Treasury auctioned thirty-year bonds and was knocked over in the rush.

And speaking of safe havens, gold took a breather on Wednesday night, but the buyers were back in earnest last night having absorbed expectations that an Obama administration meant QE was not going away anytime soon. Gold rose US$14.30 to US$1732.80/oz.

It was not quite all "risk off" last night nevertheless, with commodity prices rebounding after being slapped on Wednesday night. Base metals posted smallish gains, although lead rose 2%, while Brent crude added US43c to US$107.25/bbl and West Texas gained US64c to US$85.08/bbl. Iron ore fell US20c to US$121.40/t.

Currencies had little to do with price movements, with the US dollar index steady at 80.82 and the Aussie down a tad to US$1.0403.

Yesterday's local response to the big drop on Wall Street was arguably muted, with an unchanged unemployment rate helping, but a noticeable gain in bank stocks suggesting another rush to safe yield, from both on and offshore. As to whether the same will be said by the end of today's session is another matter, with the SPI Overnight closing down 40 points or 0.9%.

The local market may be pulled up by, or may even be further thumped by, the monthly Chinese data dump due around lunchtime. Inflation, retail sales, industrial production and fixed investment numbers are all due along with the trade balance on the weekend.