Politics dictates market

Three days of continuous heavy selling and spike in VIX set the stage for some further fall next week?  If January is any indication of what's ahead for the year, I am tightening the seat belt for a bumpy year.

Doubts over the economic and political front seem to suggest that there will not be short of company by short-term bumps. There is no way to tell whether the past week's selling may be the beginning of a larger correction or not, i'll focus on issues that may have a longer-term impact on the market, several to watch next week:

Bernanke's re-confirmation as Fed chief.   Removal of either (Fed chief Bernanke and Treasury Secretary Tim Geithner) sends bad signal to the market.

Budget deficit. Healthcare plan as part of it. Obama endorsed deficit task force. Up for Congressional approval. This is a long term problem needing long term solution. Any other solutions than higher taxes and less spending? inflate the debt off?

Fed meeting. Given employment number staying above 10%, do not have false hopes that it's going to raise rate soon. All the talks about "recovery" are smokes...

Obama State of the Union address. Upon one-year anniversary of his presidency the economy becomes Obama's economy, as people began to forget George W. Bush. The difficult part has just begun.

New banking regulation. Main street or wall street? Obama seemed to have made the choice. The former Fed chair Volcker made a comeback. He'll play the dragon slayer. The banks will fight viciously.