Israel says prefers diplomacy over Gaza invasion option

GAZA/JERUSALEM (Reuters) - Israel bombed dozens of targets in Gaza on Monday and said that while it was prepared to step up its offensive by sending in troops, it preferred a diplomatic solution that would end Palestinian rocket fire from the enclave.


As international pressure mounted for a truce, mediator Egypt said a deal to end the fighting could be close.


Twelve Palestinian civilians and four fighters were killed in the air strikes, bringing the Gaza death toll since fighting began on Wednesday to 90, more than half of them non-combatants, local officials said. Three Israeli civilians have been killed.


After an overnight lull, militants in the Hamas-run Gaza Strip fired 45 rockets at southern Israel, causing no casualties, police said. One damaged a school, but it was closed at the time.


The deaths of 11 Palestinian civilians - nine from one family - in an air strike on Sunday - drew more international calls for an end to six days of hostilities and could test Western support for an offensive Israel billed as self-defense after years of cross-border rocket attacks.


Israel's military did not immediately comment on a report in the liberal Haaretz newspaper that it had mistakenly fired on the Dalu family home, where the dead spanned four generations, while trying to kill a Hamas rocketry chief.


Echoes of explosions in Gaza mixed with cries of grief and defiant chants of "God is greatest" at the funeral of the four children and five women killed in the attack that flattened the three-storey house. Their bodies were wrapped in Palestinian and Hamas flags and thousands turned out to mourn them.


United Nations Secretary-General Ban Ki-moon was due to arrive in Cairo to weigh in on ceasefire efforts led by Egypt, which borders both Israel and Gaza and whose Muslim Brotherhood-rooted government has been hosting leaders of Hamas and Islamic Jihad, a smaller armed faction in the Palestinian enclave.


Israeli media said a delegation from Israel had also been to Cairo for the truce talks. A spokesman for Prime Minister Benjamin Netanyahu's government declined comment on the matter.


"Israel is prepared and has taken steps, and is ready for a ground incursion which will deal severely with the Hamas military machine," a senior official close to Netanyahu told Reuters.


But he added: "We would prefer to see a diplomatic solution that would guarantee the peace for Israel's population in the south. If that is possible, then a ground operation would no longer be required. If diplomacy fails, we may well have no alternative but to send in ground forces."


The official's language echoed that of U.S. President Barack Obama, who said on Sunday it would be "preferable" to avoid a move into Gaza. Obama also said Israel had a right to self-defense and no country would tolerate missiles raining down on its citizens.


Egyptian negotiators could be close to achieving a deal between Israel and the Palestinians to stop the fighting could be close, the Egyptian prime minister said.


"I think we are close, but the nature of this kind of negotiation, (means) it is very difficult to predict," Hisham Kandil said in an interview in Cairo for the Reuters Middle East Investment Summit.


Egypt's foreign minister is expected to visit Gaza on Tuesday with a delegation of Arab ministers to express solidarity with the Palestinians.


In scenes recalling Israel's 2008-2009 winter invasion of Gaza, tanks, artillery and infantry have massed in field encampments along the sandy, fenced-off Gaza border and military convoys moved on roads in the area.


Israel has also authorized the call-up of 75,000 military reservists, so far mobilizing around half that number.


WORLD CONCERN


The Gaza fighting has stoked the worries of world powers watching an already combustible region.


In the absence of any prospect of permanent peace between Israel and Hamas and other Islamist factions, mediated deals for each to hold fire unilaterally have been the only formula for stemming bloodshed in the past. But both sides now placed the onus on the other.


Izzat Risheq, aide to Hamas politburo chief Khaled Meshaal, wrote on Facebook that Hamas would enter a truce only after Israel "stops its aggression, ends its policy of targeted assassinations and lifts the blockade of Gaza".


Listing Israel's terms, Vice Prime Minister Moshe Yaalon wrote on Twitter: "If there is quiet in the south and no rockets and missiles are fired at Israel's citizens, nor terrorist attacks engineered from the Gaza Strip, we will not attack."


Yaalon also said Israel wanted an end to Gaza guerrilla activity in the neighboring Egyptian Sinai, a desert peninsula where lawlessness has spread during Cairo's political crises.


Israel bombed some 80 sites in Gaza overnight, the military said, adding in a statement that targets included "underground rocket launching sites, terror tunnels and training bases" as well as "buildings owned by senior terrorist operatives".


Netanyahu has said he had assured world leaders that Israel was doing its utmost to avoid causing civilian casualties in Gaza. At least 22 of the Gaza fatalities have been children, medical officials said.


Before leaving for Cairo, Ban urged Israel and the Palestinians to cooperate with all Egyptian-led efforts to reach an immediate ceasefire.


But a big rocket strike might be enough for Netanyahu to give a green light for a Gaza invasion, despite the political risks of heavy casualties before a January election he is favored to win.


Although 84 percent of Israelis supported the current Gaza assault, according to a Haaretz poll, only 30 percent wanted an invasion. Nineteen percent wanted their government to work on securing a truce soon.


Israel's declared goal is to deplete Gaza arsenals and force Hamas to stop rocket fire that has bedevilled Israeli border towns for years.


The rockets now have greater range, becoming a strategic weapon for Gaza's otherwise massively outgunned militants. Several projectiles have targeted Tel Aviv and Jerusalem. None hit the two cities and some of the rockets were shot down by Israel's Iron Dome interceptor system.


As a precaution against the rocket interceptions endangering nearby Ben-Gurion International Airport, civil aviation authorities said on Monday new flight paths were being used.


There was no indication takeoffs and landings at Ben-Gurion had been affected.


Hamas and other groups in Gaza are sworn enemies of the Jewish state which they refuse to recognize and seek to eradicate, claiming all Israeli territory as rightfully theirs.


Hamas won legislative elections in the Palestinian Territories in 2006 but a year later, after the collapse of a unity government under President Mahmoud Abbas the Islamist group seized control of Gaza in a brief and bloody civil war with forces loyal to Abbas.


Read More..

Wii U Launch Day: Everything You Need to Know
















For Nintendo fans, the big day has arrived. Nintendo‘s newest console, the Wii U, began selling at midnight on Sunday morning across the United States.


[More from Mashable: Meet the Super Fan Who Waited in Line for a Month for a Wii U [VIDEO]]













The Wii U boasts high definition graphics and an innovative, new tablet controller called the GamePad. The GamePad can act as a second screen, either mirroring or displaying asynchronous content from the console. The GamePad can also function without the television even turned on.


Nintendo hosted a launch event at its Nintendo World store in Rockefeller Center in New York on Saturday night. Some fans had been lined up for a week or longer to pick up a console, and as the countdown ticked down to midnight, the line wrapped around the building. The event was attended by Nintendo of America President Reggie Fils-Amie, who addressed the crowd, as well as other Nintendo executives.


[More from Mashable: Marijuana Vending Machine Maker’s Stock Skyrockets and Everybody Freaks Out]


But demand for the console may not reach the insatiable levels of the 2006′s Wii launch, which sold out in stores across the country preceding the holidays. At 11:30 a.m., a Nintendo World employee said they still had consoles in stock, though there was a line of 30 people outside. Mashable was able to pick up a Wii U in a Brooklyn Target with no lines at 9:30 a.m.


We collected peoples’ photos and tweets of their experiences waiting in line across the country with Storify.



We want to hear your stories. Are you picking up a Wii U today? Drop a note in the comments or tweet a picture with the hashtag #wiiulines.


Assassin’s Creed III


A version of the latest chapter in the Assassin’s Creed saga, a week after it was released on other console.


Click here to view this gallery.


This story originally published on Mashable here.


Gaming News Headlines – Yahoo! News



Read More..

RuPaul's Drag Race Season 5 Contestants Announced















11/19/2012 at 09:30 AM EST



Start your engines ... RuPaul's Drag Race is back!

Fresh on the heels of RuPaul's All Stars Drag Race, the fifth season ofRuPaul's Drag Race is slated to premiere in January 2013.

Not only will 14 contestants from around the world compete for the coveted title of America's Next Drag Superstar, there's also $100,000 cash at stake.

"As we start our fifth season, I'm thrilled to announce that Britney Spears, Demi Lovato, Mariah Carey, Nicki Minaj and Keith Urban will not be joining us as full time judges," RuPaul said in a statement. "Don't get me wrong, I love them all. But we're gonna keep it all hood up in here. Because that's what makes RuPaul's Drag Race the best damn show on TV."

The season five contestants are Alaska, Alyssa Edwards, Coco Montrese, Detox, Honey Mahogany, Ivy Winters, Jade Jolie, Jinkx Monsoon, Lineysha Sparx, Monica Beverly Hillz, Penny Tration, Roxxxy Andrews, Serena ChaCha and Vivienne Pinay.

Get a sneak peek of the new queens below – and try not to gag on all the eleganza.


Read More..

EU drug regulator OKs Novartis' meningitis B shot

LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.

There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.

Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.

In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.

Novartis said the immunization has had side effects such as fever and redness at the injection site.

Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.

Read More..

Wall Street Week Ahead: Going off "cliff" with a bungee cord

NEW YORK (Reuters) - The 1987 crash. The Y2K bug. The debt ceiling debacle of 2011.


All these events, in the end, turned out to be buying opportunities for stocks. So will the "fiscal cliff," some investors say as they watch favorite stocks tumble during the political give-and-take happening in Washington.


The first round of talks aimed at avoiding the "fiscal cliff" caused a temporary rise in equities on Friday, signaling Wall Street's recent declines could be a buying opportunity. The gains were small and sentiment remains weak, but it suggests hope for market bulls.


Though shares ended moderately higher on Friday, it was not enough to offset losses for the week. The S&P was down 1.5 percent, while both the Dow and the Nasdaq fell 1.8 percent.


The S&P 500 is down more than 5 percent in the seven sessions that followed President Barack Obama's re-election. Uncertainty arose as attention turned to Washington's task of dealing with mandated tax hikes and spending cuts that could take the U.S. economy back into recession.


Some see the market's move as an overreaction to hyperbolic headlines about policy gridlock in Washington, believing stocks may start to rebound in what should be a quiet few days ahead of the Thanksgiving holiday next Thursday.


"It just doesn't seem to make any sense that you suddenly wake up the day after the election and realize we've got a fiscal cliff," said Krishna Kumar, partner at New York hedge fund Goose Hollow Alpha Advisors.


Not long ago the S&P was on target for its second-best year in the last 10, riding a 17 percent advance in 2012. That's been halved to about 8 percent, which isn't bad but disappointing compared with just a month ago.


Investors have been selling the year's winners. Apple is down 25 percent from its peak above $700. General Electric is down 14 percent; Google has lost 16 percent. Overall, the stocks that make up the top 10 percent of performers in the month prior to Election Day have been the worst performers since, according to Bespoke Investment Group of Harrison, New York.


"I think it's a good opportunity to be long stocks at these levels," said Kumar.


Hikes on capital gains and dividend taxes are on the line, and Obama has dug in his heels on what he sees as a mandate to make the tax code more progressive.


He seems to have the upper hand in dealings with Congress because Republican lawmakers don't want to see tax rates increase, which is what will happen if no solution is found by the beginning of 2013. Republicans don't want to take the blame for driving the economy over the cliff.


The current crisis is similar to last year's fight to raise the U.S. debt ceiling, which led to the downgrade of the United States' top credit rating in early August 2011.


During the dealings, the S&P 500 lost 18.8 percent between its peak in July 2011 and its bottom in August. As the market slid, the political standoff badly hurt investors' confidence in Washington, setting off a spike in volatility.


In the end a deal was announced that raised the ceiling and put off longer-term fiscal decisions until January 1, 2013, setting the stage for today's "fiscal cliff" crisis.


After staying flat through September 2011, the S&P 500 jumped 31 percent between its October low and the end of March.


BUY THE DIP?


Gridlock in Washington and all that could possibly go wrong with the economy if a deal is not reached have grabbed the headlines, but the negotiations leave room for stock market gains. Congressional leaders said Friday they will work through the Thanksgiving holiday recess to find a solution.


"The debate over how to solve (the fiscal cliff) may be more productive than is commonly recognized," said Brad Lipsig, senior portfolio manager at UBS Financial Services in New York.


"The U.S. is facing a major debt overhang, and serious steps toward addressing it might ultimately be viewed as a positive for future growth," he said. "The market may recognize this and, after a time of hand wringing, recover from the concerns with a renewed sense of optimism."


The recent selling took the S&P 500's relative strength index - a technical measure of internal strength - below 30 this week, indicating the benchmark is oversold and due for a rebound.


The RSI in four of the 10 S&P sectors - utilities, telecoms, consumer staples and technology - is below 30 and the highest RSI reading, for the consumer discretionary sector, is below 40, suggesting a bounce is in store.


"What I want to do is what we did during the decline following the budget negotiations in the summer of 2011: The lower the stock market goes, the more I want to own stock," said Brian Reynolds, chief market strategist at New York-based Rosenblatt Securities.


"If we go off the cliff it will be with a bungee cord attached," he said.


KEEP CALM AND HEDGE


Volatility is expected to rise through the end of November and to spike in late December if no agreement on the fiscal cliff is reached in Congress. Alongside comes opportunity for those with high risk tolerance.


"Recently, volatility has increased in the market overall. You can't really pick it up in the VIX yet, but I think as we get through November, I think you're likely to see the VIX be at a relatively higher level," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.


In 2011, the VIX averaged 19.2 in July and 35 in August. So far this month the average is 17.8 and it is expected to spike if negotiations on the cliff drag into late next month.


"Looking at the range of possibilities, I would say any of them would be better than sitting here waiting. I would even put going off the fiscal cliff in that category," said Jill Cuniff, president of Seattle-based Edge Asset Management Inc, which manages about $20 billion.


"But we don't believe Congress will let that happen; there's going to be some middle ground here."


(Reporting by Rodrigo Campos and Jonathan Spincer, additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)


Read More..

Israel, Gaza fighting rages on as Egypt seeks truce

GAZA/JERUSALEM (Reuters) - Israel bombed Palestinian militant targets in the Gaza Strip from air and sea for a fifth straight day on Sunday, preparing for a possible ground invasion while also spelling out its conditions for a truce.


Palestinians launched dozens of rockets into Israel and targeted its commercial capital, Tel Aviv, for a fourth day. The "Iron Dome" missile shield shot down two of the rockets fired toward Israel's biggest city but falling debris from the interception hit a car, which caught fire. Its driver was not hurt.


In scenes recalling Israel's 2008-2009 winter invasion of the Gaza Strip, tanks, artillery and infantry massed in field encampments along the sandy border. Military convoys moved on roads in the area newly closed to civilian traffic.


Prime Minister Benjamin Netanyahu said Israel was ready to widen its offensive.


"We are exacting a heavy price from Hamas and the terrorist organizations and the Israel Defence Forces are prepared for a significant expansion of the operation," Netanyahu said at a cabinet meeting, giving no further details.


Palestinian officials said 56 Palestinians, most of them civilians, including 16 children, have been killed in small, densely populated Gaza since the Israeli offensive began, with hundreds wounded. More than 500 rockets fired from Gaza have hit Israel, killing three civilians and wounding dozens.


Israel unleashed intensive air strikes on Wednesday, killing the military commander of the Islamist Hamas movement that governs Gaza and spurns peace with the Jewish state.


Israel's declared goal is to deplete Gaza arsenals and press Hamas into stopping cross-border rocket fire that has bedeviled Israeli border towns for years and is now displaying greater range, putting Tel Aviv and Jerusalem in the crosshairs.


AIR STRIKE ON MEDIA CENTRES


In air raids on Sunday, two Gaza City media buildings were hit, witnesses said. Eight journalists were wounded and facilities belonging to Hamas's Al-Aqsa TV as well as Britain's Sky News were damaged.


An employee of Beirut-based al Quds television station lost his leg in the attack, local medics said.


The Israeli military said the strike targeted a rooftop "transmission antenna used by Hamas to carry out terror activity", and that journalists in the building had effectively been used as human shields by the group.


Three other attacks killed three children and wounded 14 other people, medical officials said, with heavy detonations regularly jolting the Mediterranean coastal enclave.


Egyptian President Mohamed Mursi said in Cairo, as his security deputies sought to broker a truce with Hamas leaders, that "there are some indications that there is a possibility of a ceasefire soon, but we do not yet have firm guarantees".


Egypt has mediated previous ceasefire deals between Israel and Hamas, the latest of which unraveled with recent violence.


A Palestinian official told Reuters the truce discussions would continue in Cairo on Sunday, saying "there is hope", but that it was too early to say whether the efforts would succeed.


U.N. Secretary-General Ban Ki-moon will be in Egypt on Monday for talks with Mursi, the foreign ministry in Cairo said. U.N. diplomats earlier said Ban was expected in Israel and Egypt this week to push for an end to the fighting.


Asked on Israel Radio about progress in the Cairo talks, Silvan Shalom, one of Netanyahu's deputies, said: "There are contacts, but they are currently far from being concluded."


Listing Israel's terms for ceasing fire, Moshe Yaalon, another deputy to the prime minister, wrote on Twitter: "If there is quiet in the south and no rockets and missiles are fired at Israel's citizens, nor terrorist attacks engineered from the Gaza Strip, we will not attack."


SYRIAN FRONT


Israel's military also saw action along the northern frontier, firing into Syria on Saturday in what it said was a response to shooting aimed at its troops in the occupied Golan Heights. Israel's chief military spokesman, citing Arab media, said it appeared Syrian soldiers were killed in the incident.


There were no reported casualties on the Israeli side from the shootings, the third case this month of violence that has been seen as a spillover of battles between Syrian President Bashar al-Assad's forces and rebels trying to overthrow him.


Israel's operation in the Gaza Strip has so far drawn Western support for what U.S. and European leaders have called its right to self-defense, but there was also a growing number of appeals from them to seek an end to the hostilities.


British Foreign Minister William Hague said on Sky News that he and Prime Minister David Cameron "stressed to our Israeli counterparts that a ground invasion of Gaza would lose Israel a lot of the international support and sympathy that they have in this situation".


Israel's cabinet decided on Friday to double the current reserve troop quota set for the Gaza campaign to 75,000. Some 31,000 soldiers have already been called up, the military said.


Netanyahu, in his comments at Sunday's cabinet session, said he had emphasized in telephone conversations with world leaders "the effort Israel is making to avoid harming civilians, while Hamas and the terrorist organizations are making every effort to hit civilian targets in Israel".


Israel withdrew settlers from Gaza in 2005 and two years later Hamas took control of the slender, impoverished territory, which the Israelis have kept under blockade.


NETANYAHU IN RE-ELECTION BID


Ben Rhodes, a deputy national security adviser to President Barack Obama, said the United States would like to see the conflict resolved through "de-escalation" and diplomacy, but also believed Israel had the right to self-defense.


A possible sweep into the Gaza Strip and the risk of major casualties it brings would be a significant gamble for Netanyahu, favored to win a January election.


The last Gaza war, a three-week Israeli blitz and invasion four years ago, killed 1,400 Palestinians, mostly civilians. Thirteen Israelis died in the conflict.


The current flare-up around Gaza has fanned the fires of a Middle East ignited by a series of Arab uprisings and a civil war in Syria that threatens to spread beyond its borders.


One significant change has been the election of an Islamist government in Cairo that is allied with Hamas, which may narrow Israel's maneuvering room in confronting the Palestinian group. Israel and Egypt made peace in 1979.


On Saturday, Israeli aircraft bombed Hamas government buildings in Gaza, including the offices of Prime Minister Ismail Haniyeh and a police headquarters.


Israel's Iron Dome missile interceptor system has destroyed more than 200 incoming rockets from Gaza in mid-air since Wednesday, saving Israeli towns and cities from potentially significant damage.


However, one rocket salvo unleashed on Sunday evaded Iron Dome and wounded two people when it hit a house in the coastal city of Ashkelon, police said.


(Additional reporting by Maayan Lubell in Jerusalem and London bureau, Writing by Jeffrey Heller)


Read More..

So, Here’s That ‘Big Bang Theory’ Flashmob You Wanted
















We realize there’s only so much time one can spend in a day watching new trailers, viral video clips, and shaky cell phone footage of people arguing on live television. This is why every day The Atlantic Wire highlights the videos that truly earn your five minutes (or less) of attention. Today:


RELATED: Beating Novak Djokovic: Never Forget Three-Fingered Steve













Psychologist Richard Wiseman has an interactive game for you to let you know you’re just predictable. To be fair, a couple of us tried it out and were not as predictable as Wiseman thought we were going to be. But without further ado, here it is (have some screen cleaner ready):


RELATED: A ‘Mad Men’ Rickroll and the Man That Destroys Carnival Games


RELATED: It’s Sort of Fun Watching Pippa Middleton Squirm


We too are very excited for the Disney installments of Star Wars. New movies, Ewoks, whatever count us in. We’re just not this excited: 


RELATED: A Video to Restore Our Faith in Humanity and a Glacier Tsunami


RELATED: Myspace Hopes Its Sexy New Video will Bring You Back


If you don’t know, The Big Bang Theory is basically a show about a bunch of really smart, really nerdy dorks. Now when it comes to the actual cast of The Big Bang Theory, we’re only pretty sure (and happy to be proven wrong) only one of those things apply:


And finally, do you have $ 37? If so, would you mind donating it to The Atlantic Wire robot fish aquarium fund? We promise, it’s totally a great cause. Thanks in advance!


Wireless News Headlines – Yahoo! News



Read More..

Taylor Swift and One Direction's Harry Styles: Are They Dating?















11/17/2012 at 10:40 PM EST







Taylor Swift and Harry Styles


Janet Mayer/Splash News Online; Don Arnold/Wireimage


Taylor Swift appears to be taking her love life in a new direction.

The "Never Ever Getting Back Together" singer is seemingly taking her lyrics to heart as she moves on from recent ex, Conor Kennedy, and enjoys the company of One Direction hottie Harry Styles.

"I had to literally do a double-take," an onlooker tells PEOPLE of finding Styles, 18, with Swift, 22, on the set of The X Factor Thursday morning.

Styles was on hand to watch Swift rehearse the debut of "State of Grace," which she performed later that night on the Fox reality show.

"He was smiling at her while she rehearsed. When she was done he jumped up on stage, picked her up, put her over his shoulder and carried her off stage," the onlooker says. "The whole crew was really surprised."

The young singers were also spotted by X Factor host Mario Lopez, who says he was slapped on the back by Styles during Swift's rehearsal.

"I said, 'What are you doing here,' " Lopez said on his 104.3 MY FM radio show Friday. "And he sort of [pointed] toward Taylor."

Lopez went on to say he later saw the two "hand-in-hand."

A telling sign of the budding relationship may have been a look Styles shared with his bandmate Niall Horan a week earlier after Horan told PEOPLE his favorite song of 2012 was Swift's "Never Ever Getting Back Together."

When asked if he would ever date Swift, Horan gave a small laugh, looked at Styles and answered with a succinct, "no."

Read More..

EU drug regulator OKs Novartis' meningitis B shot

LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.

There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.

Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.

In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.

Novartis said the immunization has had side effects such as fever and redness at the injection site.

Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.

Read More..

Wall Street Week Ahead: Going off "cliff" with a bungee cord

NEW YORK (Reuters) - The 1987 crash. The Y2K bug. The debt ceiling debacle of 2011.


All these events, in the end, turned out to be buying opportunities for stocks. So will the "fiscal cliff," some investors say as they watch favorite stocks tumble during the political give-and-take happening in Washington.


The first round of talks aimed at avoiding the "fiscal cliff" caused a temporary rise in equities on Friday, signaling Wall Street's recent declines could be a buying opportunity. The gains were small and sentiment remains weak, but it suggests hope for market bulls.


Though shares ended moderately higher on Friday, it was not enough to offset losses for the week. The S&P was down 1.5 percent, while both the Dow and the Nasdaq fell 1.8 percent.


The S&P 500 is down more than 5 percent in the seven sessions that followed President Barack Obama's re-election. Uncertainty arose as attention turned to Washington's task of dealing with mandated tax hikes and spending cuts that could take the U.S. economy back into recession.


Some see the market's move as an overreaction to hyperbolic headlines about policy gridlock in Washington, believing stocks may start to rebound in what should be a quiet few days ahead of the Thanksgiving holiday next Thursday.


"It just doesn't seem to make any sense that you suddenly wake up the day after the election and realize we've got a fiscal cliff," said Krishna Kumar, partner at New York hedge fund Goose Hollow Alpha Advisors.


Not long ago the S&P was on target for its second-best year in the last 10, riding a 17 percent advance in 2012. That's been halved to about 8 percent, which isn't bad but disappointing compared with just a month ago.


Investors have been selling the year's winners. Apple is down 25 percent from its peak above $700. General Electric is down 14 percent; Google has lost 16 percent. Overall, the stocks that make up the top 10 percent of performers in the month prior to Election Day have been the worst performers since, according to Bespoke Investment Group of Harrison, New York.


"I think it's a good opportunity to be long stocks at these levels," said Kumar.


Hikes on capital gains and dividend taxes are on the line, and Obama has dug in his heels on what he sees as a mandate to make the tax code more progressive.


He seems to have the upper hand in dealings with Congress because Republican lawmakers don't want to see tax rates increase, which is what will happen if no solution is found by the beginning of 2013. Republicans don't want to take the blame for driving the economy over the cliff.


The current crisis is similar to last year's fight to raise the U.S. debt ceiling, which led to the downgrade of the United States' top credit rating in early August 2011.


During the dealings, the S&P 500 lost 18.8 percent between its peak in July 2011 and its bottom in August. As the market slid, the political standoff badly hurt investors' confidence in Washington, setting off a spike in volatility.


In the end a deal was announced that raised the ceiling and put off longer-term fiscal decisions until January 1, 2013, setting the stage for today's "fiscal cliff" crisis.


After staying flat through September 2011, the S&P 500 jumped 31 percent between its October low and the end of March.


BUY THE DIP?


Gridlock in Washington and all that could possibly go wrong with the economy if a deal is not reached have grabbed the headlines, but the negotiations leave room for stock market gains. Congressional leaders said Friday they will work through the Thanksgiving holiday recess to find a solution.


"The debate over how to solve (the fiscal cliff) may be more productive than is commonly recognized," said Brad Lipsig, senior portfolio manager at UBS Financial Services in New York.


"The U.S. is facing a major debt overhang, and serious steps toward addressing it might ultimately be viewed as a positive for future growth," he said. "The market may recognize this and, after a time of hand wringing, recover from the concerns with a renewed sense of optimism."


The recent selling took the S&P 500's relative strength index - a technical measure of internal strength - below 30 this week, indicating the benchmark is oversold and due for a rebound.


The RSI in four of the 10 S&P sectors - utilities, telecoms, consumer staples and technology - is below 30 and the highest RSI reading, for the consumer discretionary sector, is below 40, suggesting a bounce is in store.


"What I want to do is what we did during the decline following the budget negotiations in the summer of 2011: The lower the stock market goes, the more I want to own stock," said Brian Reynolds, chief market strategist at New York-based Rosenblatt Securities.


"If we go off the cliff it will be with a bungee cord attached," he said.


KEEP CALM AND HEDGE


Volatility is expected to rise through the end of November and to spike in late December if no agreement on the fiscal cliff is reached in Congress. Alongside comes opportunity for those with high risk tolerance.


"Recently, volatility has increased in the market overall. You can't really pick it up in the VIX yet, but I think as we get through November, I think you're likely to see the VIX be at a relatively higher level," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.


In 2011, the VIX averaged 19.2 in July and 35 in August. So far this month the average is 17.8 and it is expected to spike if negotiations on the cliff drag into late next month.


"Looking at the range of possibilities, I would say any of them would be better than sitting here waiting. I would even put going off the fiscal cliff in that category," said Jill Cuniff, president of Seattle-based Edge Asset Management Inc, which manages about $20 billion.


"But we don't believe Congress will let that happen; there's going to be some middle ground here."


(Reporting by Rodrigo Campos and Jonathan Spincer, additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)


Read More..