The markets pulled back significantly on news from Europe that the optimal solution to their debt crisis may not be materializing overnight - and this was a surprise? Technical analysts will view this as simply a case of the markets hitting resistance and bouncing back downward into the trading range of the past two months. The economic data that came out today wasn't extremely negative, but it certainly wasn't very positive either, so that didn't help traders' moods. The Empire Manufacturing survey came in at -8.48, slightly better than last month's -8.82, but worse than the -5.0 that was widely expected. Industrial production increased an anemic 0.2% and capacity utilization stands at 77.4%. So in the absence of any strong economic date suggesting a strong recovery, everyone is focused on Europe. And that situation isn't going to be resolved anytime soon. SPX opened at yesterday's close and traded steadily downward from there, closing at the lows of the day at $1201, down $24. RUT also lost $24 to close at $689. Lower than average trading volume continues with 2.8 billion shares of the S&P 500 trading today; this is a decline from yesterday and well below the 50 dma at 3.9B. Trading on the NYSE was up 10% and trading volume was up 1% on NASDAQ. The VIX jumped up 5 points to 33.4%, reaffirming the concerns of further bearish trade in the coming days.

My Oct iron condor on RUT stands at a P/L of +$856 with position delta = -$19 and position theta = +$296 on 20 contracts. Both spreads are about two standard deviations OTM. The Nov condor stands at a P/L of +$480 with delta = -$24 and theta = +$142 (also 20 contracts).

Today's trading so steadily downward all day and closing with the major market averages near or at their lows for the day is pretty bearish behavior. This may be the beginning of a run downward to test the support levels of this trading range once again - a great market for non-directional traders, but a very difficult market for directional traders. The fact that these runs both upward and back down are occurring on low volume just reaffirms the market's lack of direction - we are basically trading sideways in a wide range until traders gain confidence to trade strongly one way or the other.