12:15pm (EST)

The bulls got off to a nice start this morning at the opening bell and tried to push resistance but the uncertainty of the Fiscal Cliff continues to weigh on the major indexes.  The zombies are still on vacation and are “on call” to come in within 48 hours with the head zombie flying back in from Hawaii tonight.

We said in the Weekly Wrap and Monday morning we didn’t think the President would fly back from his vacation if some type of deal was in the works but it could all be a bunch of “horses and bayonets”.

We said this week would be an important tell for the market and the first week of January will also be key on what direction the market takes over the next 3 months.  The action on Friday/ Monday wasn’t good and was the first time in months we had a lower Friday/ Monday close.  This F/M will be just as important and the last trading day of the year hasn’t been too kind to the bulls over the past decade as the Nasdaq has fallen in 10 of the last 11 years on December 31. 

Perhaps the zombies will put a patch on the Fiscal Cliff or kick the can into 2013 but if they do nothing and the bears continue to attack, the market could be headed for a trend change.  Usually after weeks of a choppy, range bound market there is a big breakout or breakdown and we have outlined clear lines of support and resistance and where a trend change will take place.

These are the times as option traders we live for and we love playing bear markets just as bull markets.  We mentioned this morning we are in good shape with our portfolio as we wind down the year and start to plan our next “batch” of trades. 

As we head to press, the Dow is down 45 points to 13,093 while the S&P 500 is lower by 8 points to 1,418.  The Nasdaq is off a double-deuce (22 points) to 2,989 and the Russell 2000 is down 4 points to 840.  The S&P Volatility Index ($VIX, 19.51, up 1.67) is up 9% but hasn’t tripped 20, yet. 

Subscribers, check the Members Area for the updates as we have a NEW TRADE and action to take on another.  Use limit orders to get the best fills and we will be back in the morning with a full report.