The economy suffered when the government cut defense spending last year. Now investors assume that Congress will avoid further drastic cuts that could cause even more damage. President Obama's speech this afternoon may give equity investors confidence.

Last week, the fixed-income market's quality spreads forecast a minor correction. Now the bond market suggests that the correction is over, and the equity rally may be back on track. Here is a graph of the S&P for one week.

Stay invested in equities, but don't relax. January's outsized gains cannot continue all year.