Markets rallied again today, but on lower volume. SPX gained $16 to close at $1254 and RUT closed up $24 at $736. RUT has now closed for the first time outside the trading range formed since early August. SPX closed outside this trading range for the second time today, but the lower volume causes one to pause. The next resistance level is the $1260 low formed in June. The VIX dropped to 29%. This modest drop reinforces the fact that we still have several ticking time bombs in Europe. Overnight news from Europe could tank our markets very easily one of these days, so be cautious. Third quarter GDP data comes out on Thursday - that will be another test of this rally. You may scoff at my caution, but the lower trading volume suggests the large institutional players are on the sidelines of this rally, so I don't think I am alone with my concerns about this market.

Trading volume dropped off today with 3.3 billion shares of the S&P 500 stocks trading; trading volume was down 20% on the NYSE and was down 5% on NASDAQ.

I hedged my November condor on RUT and it stands at a P/L of -$950 with position delta = -$37 and position theta = +$116. Volatility on RUT remains at 40% so that keeps considerable pressure on  my call spreads as this rally continues. So, we hold our binoculars with one hand as we keep a close eye on Europe and hold our wallet with the other hand. Let's see what tomorrow brings.