Stocks closed sharply lower Tuesday as the U.S. dollar rallied amid concerns that the Irish debt crisis would spread to other euro zone countries and the conflict in Korea. Despite the ominous tone of news headlines, there wasn't a lot of aggressive selling pressure in equities. As has been the theme over the past couple of weeks, there is simply a lack of buyers. Also impacting momentum is diminished liquidity due to the Thanksgiving holiday. The risk-off trade was in play today as Euro-zone debt and tensions in the Korea's prompted selling in cyclicals (energy, materials, and some discretionary names), while defensives (staples, telecom, utilities and to some extent healthcare) caught a bid as investors rotated into the lower-beta groups.

The Dow Jones Industrial Average ended down 142.21 points, or 1.27%, to close at 11,036. The S&P 500 fell 17.11 points, or 1.43%, to close at 1180, and the Nasdaq was down 37.07 points, or 1.46%, to finish at 2494.

The CBOE Volatility IndexI:VIX closed up $2.26, at $20.63, although at-the-money (ATM) volatility decreased, indicating a move lower in the near term. January 35 calls and January 20 puts were active on total option volume of 93,000 puts and 142,000 calls.

The SPDR S&P 500 ETF (SPY) - Get Report closed down $1.74, at $118.40, on total option contract volume of 1.1 million puts and 621,000 calls, with January 114 puts as the most active series on 77,200 contracts. November weekly ATM 118 put option implied volatility at 18, above a level of 16 from November 22, December monthly is at 19, below its 26-week average of 23. SPY has support at its 50-day moving average of $117.47.

PowerShares QQQ Trust (QQQQ) volatility increased as traders initiate purchases of puts. The Qs closed down $0.84, at $52.07. November 26 (W) 51 puts are active on total call option volume of 197,000 put contracts and 158,000 calls. November weekly put option implied volatility of 20 is above a level of 15 from November 22, December puts are at 21 above a level of 17 and below its 26-week average of 24. Higher volatility suggests larger price movement.

There is a slew Economic data expected to be released Wednesday due to the Thanksgiving holiday Thursday including: MBA Purchase Applications due out at 7:00 a.m. EDT, Durable Goods Orders, Personal Income and Outlays and Jobless Claims at 8:30 a.m. EDT, Consumer Sentiment at 9:55 a.m. EDT, New Home Sales at 10:00 Aa.m. EDT, EIA Petroleum Status Report at 10:30 a.m. EDT, and the EIA Natural Gas Report at 12:00 p.m. EDT. There is also one more treasury auction to watch out for tomorrow, the seven year at 1:00 p.m. EDT. The only notable companies reporting before the open are Deere (DE) - Get Report and Tiffany (TIF) - Get Report.