European sovereign debt issues loomed large in traders' minds today. Late in the day Moody's added to the gloom by downgrading Ireland's debt. SPX closed down $6 at $1314 and RUT lost $4 to close at $830. SPX bounced off of the 50 dma yesterday and earlier today, that support level appeared to have held once again. But late afternoon trading pushed markets lower and SPX broke through and closed below the 50 dma. Given that all of this occurred on higher levels of trading volume is not a good sign. Trading in the S&P 500 stocks rose above the 50 dma to 2.9 billion shares and trading volume was up 12% on the NYSE; Volume on NASDAQ was up 14%. IBD moved from a market assessment of "Confirmed Uptrend" to "Uptrend Under Pressure" yesterday.

IVolatility.com noted the possible head and shoulders pattern in the S&P 500 in their newsletter this week: left shoulder at $1345 on 2/21, head at $1370 on May 2 and right shoulder at $1355 on 6/30. The head and shoulders pattern is a classic upward trend reversal signal. It is confirmed when the price breaks down through the neckline of the pattern. In the case of SPX, that is around $1260 to $1265. My first reaction when looking at this was simply that by the time SPX breaks $1260, everyone will know the trend has turned. However, it isn't the prettiest head and shoulders pattern I have ever seen.

My Aug iron condor is essentially at break-even with a position delta of -$76 and theta = +$109. The delta of the 890 calls has returned to 12 and the call spreads are roughly one standard deviation OTM. So enough of this; now we return to worrying about Europe.