) -- The plunge in U.S. stocks this week is just some kind of Black Friday discount deal, right? Buy one share of


(NFLX) - Get Report

at the 52-week high price of $305 or so, and get another 3.5 shares for free?

Nope. The selling is all too real. And that's why investors are vulnerable to an early case of the blues this holiday season. History may favor a

Santa Claus rally

but it doesn't feel like anything else does right now.


action was ugly, ugly, ugly

with a burst of selling toward the close pushing all three major U.S. equity indices to finish at session lows.

That's never a good sign but it's especially concerning ahead of a holiday as it means traders may too full of fear to choke down much turkey, especially with Europe and Asia open for business on Thursday. Right on time, the good, old


spiked to its highest close since the start of what's been a disastrous November, settling at 33.98. Anything above 30 is considered indicative of an elevated level of apprehension.


S&P 500

is now down six straight days, putting its

year-to-date decline at 7.6% on a price basis

. Wednesday saw the index blow through the 1183-or-so level -- representing 50% retracement of the October rally's intraday peak of 1293 on Oct. 27 off an intraday low of 1075 on Oct. 4 -- that technical strategists were watching, and now it's sitting at 1162, the lowest close since Oct. 7.

Volatility giveth and volatility taketh away, and now it seems like a long shot that the usual Black Friday footage of bleary shoppers standing in the predawn darkness of retailer parking lots, sipping convenience-store coffee and waving credit cards, will be enough to spark a harmless little rally come Friday.

We've got the reverse of the old adage "no news is good news" going on in Europe right now. It's "all news is bad news" these days as it seems no small move is going to be viewed as enough to turn things around. The markets are still waiting for the so-called bazooka to come out, and as much as they may like Mario Monti or the idea of a cozy little short-term credit line from the International Monetary Fund available in a pinch, it's just not enough.

As research firm TrimTabs said in a recent note, the "European Central Bank's 'whack-a-mole' strategy of buying the bonds of troubled countries is not having much impact," and it may be time for more drastic measures.

"We believe the Eurozone faces a stark choice. Either (1) the ECB--alone or in concert with other central banks -- buys massive quantities of Eurozone government debt, making the ECB basically an arm of European governments, or (2) the Eurozone breaks up," the firm said. "We do not see any other options. The core does not have the resources to bail out the periphery, and we are not aware of any big pot of money anywhere else that is going to come to the rescue. The debt can in Europe has been kicked about as far as it can be."

Judging by the doubts implicit in Germany's disappointing bond auction on Wednesday, others appear to be thinking along similar lines. For all the good indicators the bulls can look to and make the argument that U.S. stocks should be okay -- strong corporate profits, improving (albeit slowly) economic data, reasonable valuation with the S&P 500's

forward price-to-earnings multiple at around 12.4X

-- the lack of clarity in Europe is too big a threat to ignore.

The big banks --

Bank of America

(BAC) - Get Report



(C) - Get Report



(JPM) - Get Report


Wells Fargo

(WFC) - Get Report

all lost more than 3% on Wednesday -- continue to show leadership on the downside, and the

Federal Reserve's

move to embark on another round of stress tests shows the central bank is, well,

stressed out

about whether the financial system can withstand the shock that could be in the offing if Europe can't find a way to navigate this mess.

Add in the new concerns about China after this week's disappointing factory data, and it's no surprise the exits got flooded at the close.

As for Friday, when U.S. markets reconvene, there's no big economic data to speak of, nor notable earnings reports, and stocks will get an early 1 p.m. close. But the stereotypical low-volume pre-holiday weekend session that sees the indexes drift higher amid breathless reports about massive Black Friday crowds at


(WMT) - Get Report



(TGT) - Get Report

may be off the table this year.


Written by Michael Baron in New York.

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Michael Baron


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