The markets have been like a ultra-fast hockey match and my neck is getting tired trying to follow it back and forth. That is a little facetious because many of my trades benefit from this sideways trading range. SPX has looked pretty solid lately, but RUT's decline was a bit worrisome. But the markets were happy with Yellen's comments today and so all is well - but, really, did you learn anything new? All we can do is watch for a break-out in either direction and trade accordingly. SPX gained $15 today, closing at $1872. All of that gain was accomplished in the first thirty minutes of trading; then SPX just chopped sideways for the rest of the day. But RUT applied some big-time salve today, regaining $21 of recent declines, closing at $1173.

Volatility dropped off a bit (but it never rose very much) with the VIX closing at 13.9%, down a half point.

Now that we have Yellen's testimony behind us, we are looking forward to Friday's jobs report. But it is becoming clear (to me at least) that this market is most likely going to find a reason to trade higher regardless of the actual data in the jobs report. I can hear the cynics out there saying that this is exactly the way the market behaves just before it goes over the cliff. Maybe, but I don't think the economy is that bad. I don't think it is good by any means. And I am amazed at how the media have all donned rose colored glasses since Obama entered office. Remember the continuous stream of negative news stories about three dollar gasoline when Bush was in office?

I think this is an excellent environment for the classic diagonal bull call spread. And if you add a put, I think it is pretty safe from the possible correction event.

The bottom line: watch for SPX to break $1840 on the way down or breaking $1885 to make new all-time highs. In the meantime, play sideways to slightly bullish trades.