The Producer Price Index (PPI) increased 0.8% in January, down a bit from December. This appeared to calm some developing fears of inflation raining on the economic recovery parade. Housing starts also jumped up 14.6% in January, another encouraging piece of data; but building permits dropped 10.4%. The FOMC minutes were released this afternoon and didn't really contain any new information, so the markets didn't react. Concerns about the stability of the Middle East continue as the hot spot for this market; around noon, the report of Iranian war ships entering the Suez Canal caused some selling pressure. But the market shook that off and recovered to post gains for the day. It seemed to be another example of any dip bringing in the buyers for this market. SPX gained $8 to close at $1336. RUT also gained $8 to mark a new 52 week high at $828.

It is difficult to read the price charts for the overall market when you have to go back two and a half years to find the levels one might consider as resistance. SPX has been pretty consistently tracking along the upper edge of its Bollinger bands since early December - one more data point feeding the growing number of analysts expecting a correction. But the contrarians are often right on target - when everyone appears to be looking for a correction, the market may just continue higher. This underscores one of my personal investing principles. In both my directional trades and my delta neutral trades, I resist making bold price predictions. In my experience, that is very hard to do successfully. Take a current example: GS established a strong support level at $161 in late January. On 2/1/11, I sold the GS Feb 155/160 put spread on the premise that that support level was likely to hold even if we had a minor mishap (like the Egyptian riots). Contrast that position with buying an OTM call spread on AAPL, predicting its continued move upward. Everyone finds their own trading style, and mine is no better than another trader's - but it is important to find the style you find most comfortable and consistently apply it every day. Some traders are spinning their wheels searching for the Holy Grail or the "secret".

My March iron condors are in a reasonable position as time marches on. I tried to close the 690/700 puts today and take those gains, but wasn't able to get filled at a good price. If I treat these Mar options as a single position on RUT, the P/L = -$280, delta = -$192 and theta = +$249.  Most of that negative delta is coming from the 860/870 call spreads; I will look for an opportunity to close those spreads as well as the 690/700 put spreads.