S&P FUTURES HELD HOSTAGE TO THE HEADLINES

It's hard enough trading the S&P 500 futures with all the algorithmic and program trading going on, but when you throw in the government headlines and all this stupidity surrounding the cliff, one has to really wonder why we voted for these buffoons in the first place.

With nine working days for a resolution to the fiscal cliff, the markets are treading water. The ES has been up, down and all around. When it sells off everyone gets short. When it rallies everyone gets long into the rally and then the S&P moves the other way. A few weeks ago I warned about the possibility of a U.S. credit downgrade if  Congress and the president did not get their act together. Well, here we are! Right now traders in the U.S. are concentrating on U.S. headlines and not paying much attention to what's going on overseas. While European stocks are nearing a 17-month high, Euro-area unemployment has jumped to 11.7% as the recession takes hold.

In my video yesterday I expressed my dissatisfaction over the government's inability to strike a deal to avert the fiscal cliff. As a taxpayer I have to admit that I have been quiet on the political picture for the last few months. I can't do that anymore. What our president and Congress are pulling right now is outrageous. They are messing with the population and world and we look like a bunch of dummies. I really believe it's time for a change, meaning that we the American people need to stand up and hold our elected officials responsible. What job do you know of where you're not held accountable? It's time for a new deal and it's called “The Pay for Production Plan.” Like any business, if you don't perform you don't get paid.

Let's face it: We have made it too easy for these guys to pick and choose the times they decide to clean up a crisis. That may have worked in the past, but that does not work in the new world financial order.

Danny Riley is a 34-year veteran of the trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985. Our view:
The S&P futures have closed higher 7 out of the last 9 trading days. If you're short you have to worry about positive cliff headlines and if you're long you have to worry about the negative ones. In other words, the S&P is 100% news-driven right now.

Today's data:

• It's 7 a.m. and the SPZ is trading 1416.80, up 1.1 handles; crude is down 21 cents at 87.86; and the euro is up 15 pips at 1.2991.
• In Asia 9 out of 11 markets closed higher (Shanghai Comp. +0.85%, Hang Seng +0.49%).
• In Europe 10 out of 12 markets are trading higher (CAC +0.23%, DAX +0.30%).
• Today's headline: “Index Futures Seen Higher as Fiscal Cliff Looms”
• Economic calendar:  Personal income & outlays, Chicago PMI, farm prices
• Globex volume: 1.87mil ESZ and 10k SPZ trade
• Fair value: S&P +2.75, NASDAQ +5.25

MrTopStep Closing Print Video: http://www.mrtopstep.com/videos/?id=35173
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