A cascade of events forced the yields of Italian bonds to hit 7.5% today. Higher yields triggered margin requirements, forcing many to dump Italian bonds, driving the yields higher yet. This, in turn, spooked traders in the US markets. Traders were moving to cash with financial stocks hit especially hard. Many expected Berlusconi's pledge to resign as soon reforms were passed to calm the markets, but just the opposite happened today. Apparently many analysts are skeptical that Berlusconi will in fact resign and/or that the reforms will be passed.

The SPX lost $47 to close at $1229 and RUT closed down $36 at $719. Trading volume in the S&P 500 jumped up to the 50 dma with 3.5 billion shares changing hands today. Trading volume jumped up 24% on the NYSE and rose 16% on NASDAQ. SPX is still above the $1220 support level, but not by much. RUT has broken support at $730-$735 and has now returned to the trading range of the past three months.

My Nov RUT condor stands at a P/L of -$1840 with delta = +$41 and theta = +$334. The Dec position stands at a P/L of -$380 with delta = -$21 and theta = +$102. All eyes are on Europe.