Geez, we’re off the desk for less than 12 hours and the Senate Majority Leader (SML) takes an ugly stick to the stock market.   Far from the trading action, but here’s our read Reid.

Let’s start with Harry talking to reporters,

“There’s been little progress with the Republicans, which is a disappointment to me…They talked some happy talk about doing revenues, but we only have a couple weeks to get something done…So we have to get away from the happy talk and start talking about specific things”

Get used to this, folks,  it is just the opening act.  Bad politics always trumps good economics.

It still doesn’t look like panic.  Today may just have been the cowboys banging on the market as the tape bonds were delivered up by the SML.  If there’s no real follow through selling, they will have to cover for fear of another Black Friday facial.

The S&P500 (SPY) finished the day down 0.51 percent with Russell (IWM) down 0.12 percent.  Defense and utilities were up, gold down,  dollar down,  bonds up, and the VIX up another 2.7 percent.   Not exactly the market you’d expect to see in panic about a fiscal cliff swan dive.

December 7th remains our day of infamy.  If no concrete progress by then,  it will be time to panic, hopefully, before everyone else and to put on the Get Shorty trade.  The markets have thus far been buoyed by decent economic data and what looks to be strong consumer spending during this holiday season.

Not sure how long the markets will wait, however, and,  we do know for certain,  no matter what shape the  final deal,  2013 will be the Year of the Fiscal Drag Queen.   It’s just a matter of how big.

Get your neck brace on and prepare for volatility and whipsaws as we embark on December’s Mr. Toads Wild Ride!

What would a real fiscal cliff panic look like?

Stocks down hard;  Russell 2000 down harder;  consumer discretionary down hard;  gold up;  dollar down;  VIX spiking;  and defense stocks in the tank.

Bonds?   Tough to extract a clear signal with the Fed’s financial repression, but, initially,  the cowboys would most likely be in buying on recession fears and increased worries about going over the cliff.

(click here if chart and table are not observable)