China started this huge tidal wave in the markets when it announced overnight that it was reducing the reserve requirements for their banks. Then news that our Fed was going to loan dollars to the European Central Bank poured more fuel on the fire. The result was one of the largest single day rallies in history. The Dow gained over $490 and broke through the $12,000 mark. This was the largest single day rise of the Dow since March of 2009. SPX gained $52 to close at $1247 and RUT gained $41 to close at $737. Trading volume was huge as well with 4.1 billion shares of the S&P 500 trading. Volume jumped 36% on the NYSE and was up 51% on NASDAQ. The VIX dropped about three percentage points to close at 27.8%. But before you pop the champagne, remember that the VIX dropped below 25% in late October before the November weakness set in.

Today's price action on SPX just sliced through several levels of resistance without any hesitation. The next possible resistance levels would be $1260 and then the October high at $1290.

Several economic reports bolstered this rally with the ADP employment report citing 206 thousand new jobs created on private payrolls - now the speculation starts about Friday's jobs report. The Chicago PMI jumped markedly to 62.6 for November from last month's 58.4. And pending home sales jumped over 10% in October.

My Dec iron condor on RUT stands at a P/L of +$2,080 with delta = -$4 and theta = +$52. The Jan SPX iron condor stands at a P/L of +$60 with delta = -$32 and theta = +$67. The 1350 calls are now inside of one standard deviation. Given how pessimistic traders were just a few days ago about the European sovereign debt situation, the strength of this rally is surprising. The next few days will be interesting to watch.