Market is moved by institutions. Ask your friends around to see if they would put money in the stock. Many would remind you their painful experience of 2000. So not really a big demand from the "lamb". However, institutions may not be in a hurry to sell off. 2004 and 2005 are essentially traders' war, no mass participation, so a flat market which marginally supported bulls. The sell off today will abate soon, I guess only a few traders at this point are HOPING Santa. Better opportunity into 2006. Maybe a bit rally up prior to Ben's taking control of FED and then sell of in March. Let Ben kill the housing market, so the MASS can speculate in the Stock Market )
What you are seeing is the selling 'before' the real selling begins in January. When a media promised xmas rally does not materialize, the exit doors get jammed fast. The memory of what happened last January is still fresh in most people's mind. I doubt Joe Schoe feels like holding the bag again come January. So realistically, the 'christmas' rally was really over in November....
I would not have opinion one way or another (I think the options volatility was back to normal). I found when I was long SPY (exited profitably) as a position trade last week. It affected my ES intraday trading. I wasn't able to capitalize on some of the intraday moves. I concluded that I am probably not good enough to do it again (trade around a longer term position).