With only four days left until the US economy faces the possibility of going over the "fiscal cliff," when tax increases and spending cuts are slated to go into effect, Wall Street is jockeying for position.
"Since the November low, the S&P futures have done very nicely. In the last couple of trading days, we got dinged on the downside and a lot of that has to do with the shenanigans in Washington," Ralph Acampora, senior managing director at Altaira Investment Solutions, told CNBC's "Futures Now." The VIX today is slightly higher than its November low, when the S&P 500 was at 1350, "so the fear is growing," Acampora said.
Acampora said he thinks it's more likely that the fiscal cliff won't get resolved by the end of the year, which he believes would result in another 3-4 percent drop in the S&P, and a rise in the volatility index to the 25-26 level. That would be on par with its June level, before the summer rally.
"Whatever happens, I think it is going to be climactic. I'm still a long-term bull and I think you have to buy the decline," he said, "if there is any kind of a compromise, the market will be like a rocket to the upside."
Acampora can see short-term traders taking advantage of the immediate weakness in the market, but if you're a long-term investor, like him, "you just grin and bear it," he says.
The worst Acampora sees is a 10-percent correction in the event a deal isn't reached but his outlook for 2013 is much more rosy. He expects the S&P 500 to reach 1,500 by the end of 2013, reaching all-time highs.