After a long run higher off the lows set in early November, the moment of truth has arrived and the verdict is "no deal". We knew all along it would be hard to get a deal and when the 3rd week of December came and went without one the probabilities tailed off fast. Now we get to see if this run up off the recent lows was all hope or if it had some substance. Technically the markets do not look bad and if you examine that in light of the world markets, they look even better because most of them have already signaled higher highs on the year. Swing point breaks of prior highs is seldom a bad thing.

So what will it be? Do we get a one day pull back? Is it only half a day? Might we get a real push lower that takes away the majority of the gains since the lows? The latter seems unlikely while the former as unlikely too. What seems probable is some contained give back on the realization that the likelihood of a deal being struck just isn't there. Once that sinks in, then it will be looking forward to what's happening in China, what the upcoming earnings season will look like, etc. In other words, we will have gotten over the event news which has plagued these markets since August of this year. The markets are set to open about 2% lower. Another 1/2% in addition to that would be a good target to start with for the day. From those levels we can see if some real buyers (larger players with larger pocketbooks) have any desire to put some money to work. I suspect they will. They always seem to.

Next week is going to be very light in terms of volumes so one can only expect the volatility to increase, no diminish as the cliff news dominates everything. My guess is we start to hear something about retroactive plans being putting into place in early January because nothing is going to happen this one.