The Best Buying Opportunity the Market Has to Offer Right Now

On Tuesday, stocks opened lower due to weakness in Europe. But selling accelerated when Senate Majority Leader Harry Reid said that “little progress” had been made in the fiscal cliff negotiations. Despite some positive economic reports, the comments by Reid created an immediate reaction from sellers as the Dow fell 75 points within minutes of his announcement.
At Tuesday’s close, the Dow Jones Industrial Average was off 89 points at 12,878, the S&P 500 fell 7 points at 1,399, and the Nasdaq lost 9 points at 2,968. The NYSE traded 688 million shares and the Nasdaq crossed 406 million. On both exchanges, decliners were ahead of advancers by 1.3-to-1.

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Despite the emotional reaction of the markets to the back-and-forth comments from politicians, the CBOE Volatility Index (VIX) is still surprisingly apathetic. At a critical time when the major indices are backing away from their 200-day moving averages, the VIX should be in the mid-20s, while it sits near 16. Perhaps it is telling us that the politicians will get their act together before we all fall off the fiscal cliff.

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