Yesterday's rally continued this morning on an even stronger pace, but a Financial Times article this afternoon stopped the rally in its tracks. SPX had run as high as $1196, but pulled back over $20 in the last hour of trading to close at $1175, salvaging an increase of $12 on the day. RUT gained $15 to close at $680. Rumors, news, quotes, interviews and speculation on how the European debt crisis will be handled or mishandled are driving this market. Even our own politicians fumbling around has been pushed to the back burner. Placing directional trades in this environment is very difficult.

The Case Shiller Housing Price Index dropped 4% in July and the consumer confidence index remains essentially flat at record low levels. Traders obviously were not alarmed by this weak data, since the markets were moving strongly higher before and after these reports were publicized.

SPX has been trading in the range from $1120 to $1220. Today’s run took the index near the high end of the range before pulling back. Looking back over the past couple of months, it has taken about 5 to 6 sessions to trade from one end of the range to the other. It will be interesting to see if this upward trend has now ended after three days or whether it will continue upward in an attempt to break through resistance at $1220.

My Oct condor on RUT continues with only the 500/510 put spreads. I almost pulled the trigger to sell some call spreads this afternoon, but decided to wait – then the market collapsed. I may have missed my opportunity, at least for this week. But one thing is clear in this market. Trading delta neutral is much easier than trying to predict the next move of this skittish market.