The Dow Jones Industrial Average (DJI) is looking to extend Friday's momentum, as U.S. policy makers head back to the table to discuss the $600-billion elephant in the room. However, "Given what the market did on the rumor that fiscal cliff talks went well on Friday, it's pretty obvious everyone is pricing in a disaster at the end of the year," said Schaeffer's Senior Trading Analyst Bryan Sapp. "Couple that with the sentiment polls over the past few weeks -- which have shown a big drop in the percentage bulls -- and there's the potential for a big rally."

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Futures on the Dow Jones Industrial Average are nearly 77 points above fair value.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,160,477 call contracts traded on Friday, compared to 943,313 put contracts. The resultant single-session put/call ratio dipped to 0.81, while the 21-day moving average rose to 0.74.

From the Trading Floor

"On the S&P 500 Index (SPX), I'll be watching 1,340 to the downside, and 1,360 to the upside," continued Sapp. "Additionally, I have my eye on Apple's (NASDAQ:AAPL) $520 mark."

Currencies and Commodities

• The U.S. dollar index is down 0.3% in pre-market trading to hover just north of the $81 mark.
• Crude oil has shot 1.2% higher ahead of the bell, as growing tension in the Middle East stokes supply concerns. At last check, the commodity was churning near $87.92 per barrel.
• Gold futures are up, as well, with the front-month contract adding 0.5% to trade near $1,723.40 an ounce.

Earnings and Economic Data

The holiday-shortened week kicks off with existing home sales and the National Association of Home Builders (NAHB) housing market index. Wall Street can expect earnings reports from Agilent Technologies (A), Qihoo 360 Technology (QIHU), Lowe's Companies (LOW), Brocade Communications Systems (BRCD), Urban Outfitters (URBN), Tyson Foods (TSN), Bob Evans Farms (BOBE), Perfect World (PWRD), and Shoe Carnival (SCVL).