The markets continued their sideways to downward dance today. And the debt ceiling was all anyone at CNBC could talk about - more Chicken Little drama. Ironically, the concern appears to boil down to whether our debt will be downgraded by S&P and/or Moody's (lest we forget, the same people who said all of that sub-prime mortgage debt was just fine). Most sane observers who haven't drank the kool-aid agree that a default on the debt is very unlikely. The irony derives from the fact that it is highly unlikely that the eventual compromise in Congress will do anything substantive to actually decrease our debt or even decrease the rising rate of debt creation. So the downgrade is probably coming, and it appears that the experts aren't too sure about what that means. Many speculate about rising interest rates, but considerable uncertainty persists. And, of course, the equity markets don't like uncertainty. We "fix" uncertainty by discounting the prices.

The first quarter GDP growth was revised downward to 1.3% from 1.7% and second quarter GDP grew 1.3%. This revived talk of a double dip in the economy; that spooked traders as much or more than the debt ceiling debate. The Chicago PMI report dropped a bit to 58.8 for July (61.1 in June). So traders didn't have much good news today, and it showed in the markets. SPX closed at $1292, down $8 and RUT dropped $2 to close at $797. SPX was seriously down at the open, but bounced off the 200 dma and recovered to be in positive territory briefly before selling off in the afternoon. Trading volume was up again with 3.5 billion shares of the S&P 500 trading. Trading volume was up 15% on the NYSE and up 10% on NASDAQ. The VIX closed at 25.3%, up again today. It is interesting to note that the 200 dma held when the market corrected in mid June. Will it serve as support again? The 200 day moving average of the SPX stands at $1285. It is worthwhile to keep an eye on that line in the sand.

My puts remain from the Aug iron condor on RUT, and so far, are OK with a delta of 5 on the short $680 puts. The Sept condor now sits perfectly delta neutral at delta = +$7 and theta = +$75. But the rising IV has taken its toll, forcing the P/L back to break-even. But remember: the ultimate profitability has not changed; if we are forced to close the put spreads prematurely, the increased IV will hurt us, but if we stay in the position to expiration, our full profit is still feasible.

So your assignment for the weekend is clear: postpone any more market worries until Monday morning and enjoy your family and friends. Remember what is truly important.