• It's always reasonable to expect a last-minute deal.

Today was but another reason to treat Mr. Market as a "trading sardine" market, not an "investing sardine" market.

It was also another reason to recognize why common sense is an important part of the process for an opportunistic trader.

While the media had all but given up on the chance of a fiscal cliff compromise, it has always been reasonable to expect (and the market responded to) a likely 24th-hour agreement on Sunday or Monday.

That said, the devil is in the details, and my best guess is that a patchwork deal that will result in a $300 billion fiscal drag seems the best guesstimate.

The Republicans will likely blink on taxes, and there will be some modest spending reform from the Democrats.

The rest will be kicked down the road during 2013..

The key issue is whether this is "enough" -- enough to engage the corporate sector in hiring, building inventory and expanding fixed investment plans.

I really appreciate you reading my Diary today, and I hope it was helpful in your navigation of the market.

I am "pooped," but I will see you bright and early tomorrow!

As an aside, the S&P 500 Index closed at 1418 -- amazingly only 3 handles from my "Fair Market Value" calculation, which has been in place since September.

• Here they are.

Below are the intraday breadth charts for the S&P 500, Nasdaq and Russell 2000 today.

Breadth

Source: Bloomberg

View Chart »View in New Window »

• On the S&P.

Remarkably, S&P 500 breadth has just turned positive.

• Completely sold out.

I am now out of Apple (AAPL).

• And I am shortening the leash on my remaining shares.

I am selling out of my early-morning add on to Apple (AAPL) now.

I am holding on to my other trading long rental in the name, but, quite frankly, my leash is growing shorter, as the shares trade poorly into the market's afternoon ramp.

I will likely be out of the trading rental by day's end.

• It would provide more than just a short-term pop.

Not a soul I know thinks that a fiscal cliff compromise will provide anything more than a short-term pop in the markets.

I beg to differ.

• Into the news/rally, the VIX pares back under 20 now.

• A compromise will be reached.

It has been my core, baseline expectation that a compromise will be reached, despite the continued concerns in the media and elsewhere.

I still beleive this to be the case.

• The news services report that the U.S. House is planning a 6:30 p.m. EST session on Dec. 30.

• A 2012 tax loss on my Grand Canyon Education short has me planning to revisit the name in January.

I am taking a tax loss on a portion of my Grand Canyon Education (LOPE) short position, and I will revisit the name in January.

• Over 4,500 January 15s have changed hands today.

It is interesting to note that over 4,500 Avon (AVP) January $15 calls have traded today.

• The S&P Index now stands at 1405.

That is only ten handles under my Fair Market Value calculation of 1415.

•  Who is standing out?

Remember, for traders it is always important to check out those stocks that are green in a red tape, as they are usually the first to rally.

Some candidates that i am long include Oaktree Capital (OAK), General Motors (GM), Avon (AVP) and Colgate-Palmolive (CL).

• The yield on the 10-year Note is down by 5 basis points to 1.71%.

Remember there is technical support at 1.67%.

• AIG, Northwest Bancshares, GM, Lincoln National, and Prudential are approaching my buy levels.

Here are some stocks that are getting close to my buy levels: AIG (AIG, under $34); Northwest Bancshares (NWBI, under $12); General Motors (GM, under $27.35); Lincoln National (LNC, under $24.50); and Prudential (PRU, under $52).

• I am buying more shares of Sourcefire.

I am adding to Sourcefire (FIRE) now.

• Rumor has it -- again.

My gnome, high above the Alps, is once again hearing a rumor that Coty is about to take a run at Avon Products (AVP).

As Grandma Koufax used to say, "Dougie, I will believe it when I see it."

• Procter & Gamble is my largest individual equity long.

I added further to my largest individual equity long, Procter & Gamble (PG), this morning.

• The conduct of our elected leaders has materially reduced the returns of the U.S. stock market.

As I write, we are at the day's low.

This morning I started out with "Les Misérables" in which I addressed the sad, disgraceful and dysfunctional behavior of our leaders in Washington, D.C.

This conduct has materially and directly reduced the returns of the U.S. stock market against other developed markets.

As an example, year-to-date the European equity market has outperformed the U.S. market by almost 500 basis points, despite the fact that the EU is in a recession now and will likely remain so through the first two quarters of next year. In addition, though European valuations are more attractive than our P/E multiples, the European economies face structural and bank capital problems. By contrast, our banking industry is in reasonably good shape.

And even Japan's market returns are closing in on the U.S. returns, despite that country suffering from a deflationary and no growth backdrop with a debt/GDP ratio that could choke Jean Valjean.

• It stinks.

Breadth at 11:00 a.m. EST is stinking up the joint:

• S&P 500 -- 67 advancers to 428 decliners
• NYSE -- 547 advancers to 1,266 decliners
• Nasdaq -- 750 advancers to 1,300 decliners
• Russell 2000 -- 582 advancers to 1,280 decliners

Volume on S&P is 24% lower than past 10-day average,  9% lower than past 30-day average and 41% higher than yesterday for this time of day.

• Let's parse the economic data this morning.

Initial jobless claims came in at 350,000, about 10,000 less than consensus and 12,000 under the prior week. The Labor Department mentioned that many state offices had to estimate filings owing to Christmas Eve closings, so the data could have understated claims.

The less volatile four-week moving average stands at 356,000, which is the lowest since March 2008. In addition, initial claims are down by nearly 10% -- in recessions, claims are up 15% to 20%.

These data are a positive for equities, negative to the recession crowd and point to a continued improving jobs market, which means that income growth will be improving.

It is also consistent with an average monthly payroll increase in excess of 150,000. Though not denting the unemployment rate (and keeping the Fed friendly and providing excess liquidity), this should underpin real GDP growth of at least 2% in the quarters ahead.

• Point 27 shouldn't be higher than the point 15, 17 and 19 highs of February, March and April.

A number of subscribers have asked me to update George Lindsay's "Three Peaks and a Domed House."

Here it is.

S&P 500 and Lindsay's Pattern

Source: Bloomberg

View Chart »View in New Window »

As I have previously mentioned, this chart is not fulfilling Lindsay's pattern anymore. You can see that point 27 shouldn't be higher than the point 15, 17 and 19 highs of February, March and April.

• Apple at $509.50 and TBT at $62.20.

I have added to Apple (AAPL) at $509.50 and ProShares UltraShort 20+ Year Treasury (TBT) at $62.20 today.

• The stock should pause and a build a more meaningful base before it makes a move higher in 2013.

For those who are technically inspired, we can see from this chart that the price of Ford's (F) shares face a lot of overhead supply at these levels.       

I would expect the stock to pause in here and a build a more meaningful base before it makes a move higher in 2013.

• Waiting out this one.

Apple (AAPL) trades like drek, but I am sticking with the rental for now.

• Index and individual equity.

Largest index long: PowerShares QQQ (QQQ).

Largest individual equity long: Procter & Gamble (PG).

• Gates returning to Microsoft? Read all about it.

Interesting speculation by my friend/buddy/pal Jeff Matthews (Jeff Matthews Is Not Making This Up blog) on Bill Gates returning to the helm of Microsoft (MSFT).

• I dreamed a dream of days gone by -- both at the movie house and in Washington, D.C.

As he showed in The King's Speech and in the television series "John Adams," Mr. Hooper can be very good with actors. But his inability to leave any lily ungilded -- to direct a scene without tilting or hurtling or throwing the camera around -- is bludgeoning and deadly. By the grand finale, when tout le monde is waving the French tricolor in victory, you may instead be raising the white flag in exhausted.

-- Manohla Dargis, "The Wretched Lift Their Voices," The New York Times

The literal definition of les misérables is the miserable ones, and after attending the movie last night in East Hampton, Long Island, I found the urge for wordplay to be irresistible in comparing the movie to the fiscal cliff fiasco.

I wanted to love the movie, and I was looking forward to buckets of tears, but I was sorely disappointed by a movie that never took flight - the whole experience feels similar to my increasingly sour view of our bogged down political leaders.

With the possible exception of Anne Hathaway's solo, "I Dreamed a Dream," otherwise known as the Susan Boyle song, strangely, I felt emotionally detached from the musical I had seen nine times previously.

Victor Hugo's 1862 novel is one of the greatest books ever written -- it is deep, insightful and dramatic in content, a story of the underlying belief in the redemptive power of humanity.

But, frankly, after nearly three hours of watching this movie adaptation, I felt like one of the miserable ones.

I put a lot of the blame on the film's director, Tom Hooper, who directed the great movie, The King's Speech.

Hooper utilizes numerous uncomfortable and too-close shots of actors performing their so-called revolutionary live vocal tracks -- the camera, bobbing and weaving, sometimes even cuts off the heads of the actors in this poorly framed mess. A lot has been said about the actors' live singing performances -- namely, that they were unique and intensified the emotional experience -- but I found, for the most part, the effect drowned out the musical backdrop and that most songs had a monotone and flat delivery.  It makes the scenes stumble aesthetically, causing them to come off as bloated and less heart-rending.

This all gets me back to our leaders in Washington, D.C. They, too, have let us down. They were expected, as the movie Les Misérables, to rise to the occasion, and, to date, they have failed miserably to address our looming crisis.

Similar to director Hooper divorcing himself from the greatest musical of all time through strained devices and contrivances,  nonstop partisanship and our self-possessed legislators have abandoned the notion, presented over history, that our leaders typically rise in the face of crisis.

The film tends to drag itself out -- just as our leaders have done over the past few months, as they have ignored the ramifications of their inaction and lack of compromise.

While I am glad that I saw the movie because of Anne Hathaway's wonderful performance and I still expect a weak compromise and some crumbs regarding the fiscal cliff, stated simply, Washington, D.C. has become a lousy movie.

"So it's odd that this kind of showboating maximalism should be ultimately reduced to a few fisheye'd faces, mugging for their close-up, as the people sing off-key and broken."

-- Calum Marsh, Slant Magazine

I am not sure whether Calum Marsh's review above pertains to the Les Misérables movie or the fiscal cliff debate.

Toward the convoluted end of Les Misérables (as Marius sings, "there's grief that can't be spoken"), the student revolt occupies the drama, and I got the sinking feeling that the film, similar to our political impasse, was just spinning its wheels until the next great number or compromise. But director Hooper, similar to our leaders in Washington, seemed to have run out of creative solutions. I even found myself rooting for the French soldiers, if only because it meant one less singer on the screen every time one was shot. I, too, am fed up with our leaders and find myself increasingly looking forward to them going back on vacation.

That said, neither the movie version of Les Misérables (shot and cut ineptly) nor the machinations of our politicians in Washington, D.C., (also shot and cut ineptly!) sing out, but at least the Broadway version of Les Misérables gave the audience an intermission.

• Here it is.

Below is the calendar of economic releases (and consensus expectations) for the balance of the year.

• I start the day at about 55% net long.