The German court ruling that Germany may participate in bailing out European Union members sparked a strong rally around the world. SPX gained $33 to close at $1199. RUT closed at $709, up $29. SPX could not get past $1220 about a week ago, so that will be the level to watch this week. The VIX dropped to 33% today, but that is still reasonably high; it suggests that traders are still rather cautious; it will take very little stimulus to start the selling. Trading volume in the S&P 500 actually fell a bit from yesterday to 3.1 billion shares, below the 50 dma. Trading was also down by 17% on the NYSE, but was up 3% on NASDAQ.

Tomorrow could be another volatile day in the markets due to Obama's speech to Congress. (Trivia: do any of you remember the name of the movie where the Martians blew up Congress?)

I will continue to watch $1120 and $1220 as the critical support and resistance levels that are defining this trading range on SPX. I will be cautious about any directional trades until we definitively break one of those levels.

Our September iron condors on RUT are in excellent shape. The condor with the 600/610 put spreads stands at a P/L of +$1,384 with delta = -$2 and theta = +$215. The Sept condor with the 560/570 put spreads stands at a P/L of +$2,720 with delta = -$15 and theta = +$163 (both Sept positions with 20 contracts). Today's rally forced me to hedge my Oct iron condor on RUT, so it is underwater, but the Greeks show that it is well hedged with position delta = -$13 and position theta = +$57 (on 20 contracts).

I have partnered with Mike Parnos to host a seminar in Las Vegas November 19-20. We are restricting the number of attendees so we can have a very personal and interactive meeting. You can read more about the conference here.