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Trading volume fell off today, perhaps beginning a "wait and see" trend into the Fed announcement next week. SPX gained $5 to close at $2052 and RUT gained $3 to close at $1149. But volatility didn't contract much; the VIX closed at 19.3%, down 0.3 points. The bulls are being held back by the bears quite effectively. SPX had traded up to $2068 in the afternoon, but then was pulled down into the close at $2052. Trading volume declined with 2.2 billion shares of the S&P 500 trading. Trading volume declined 17% on the NYSE and declined 12% on NASDAQ.

Has the generally bearish tone of trading the past couple of weeks suggested that an interest rate hike by the Fed will be traded downward in the markets? Perhaps so. But one could also argue that the market sell-off is already baked into the current market prices because everyone seems to assume the rate hike is a done deal. This FOMC announcement is unquestionably the most anticipated announcement in Fed history (at least during my history). We may see some extreme spikes and whipsaws next Wednesday afternoon. And expiration week often has a wide range of implied volatility swings anyway, so next week may be a record breaker.

Initial unemployment claims reported at 282k, up from last week's 269k. Continuing unemployment claims rose 82 thousand to 2.243 million.

The December SPX condor in my Flying With The Condorâ„¢ service stands roughly at break-even with position delta = $1.57 per contract; the probability of both spreads expiring worthless is 96%. The spike in volatility this week has hurt the P/L of my positions. The January SPX position stands at +5% with 35 days to expiration. I will decide tomorrow whether to close the December positions or allow them to go through the weekend. In no case will the December condors remain open past Tuesday.

The Fed watch begins...