"More telling is the rising bearish positioning in the S&P 500. As of Friday morning, open interest in November SPX put contracts was at 823,000 contracts, more than double the 384,720 outstanding SPX November call options contracts, according to options analytics firm Livevol in San Francisco."
Interesting numbers. The article covers how options traders are positioning for the election and fiscal cliff.
As you can see from the chart, the S&P is still trending higher inside two ascending channels after it broke above the March/April highs. But if it can't hold on to its current channel, it poses the risk of testing the March/April support level and the ultimate ascending channel's uptrend line (red area), which could then lead to a serious breakdown.
David Kostin, chief U.S. equity strategist at Goldman Sachs', sees the S&P 500 falling to 1250 by year-end 2012 as multiples contract on "fiscal cliff" uncertainty. But he sees the Fed's open-ended QE program boosting the S&P to 1575 by year-end 2013 (read the note at Zero Hedge). I am bearish overall here, but technically you need to see it fall off the ledge.
|S&P 500 Index ($SPX) via stockcharts.com|