The jobs report this morning was the perfect message for this market. The bulls went on a buying spree that has been unmatched recently. SPX gained $19 to close at $1345, near the July high of $1353 and near the 2011 high of $1364. RUT gapped open and tacked on a strong $18 to close at $831. Trading volume was also very strong with 3.3 billion shares of the S&P 500 trading today; volume gained 13% on the NYSE and was up 12% on NASDAQ.

The jobs report came in with an increase of 243k jobs and unemployment dropped to 8.3%. The ISM Services Index came in at 56.8 for January, up from 53.0. VIX dropped almost a full percentage point to 17.1% today; I was a little surprised it didn't drop more, given the strength of this rally.

So I guess we can officially declare the European debt crisis solved, at least so far as this market is concerned. Some analysts believe that today's spike is due to many money managers who have been sitting on large amounts of cash deciding they were being left behind after the January rally. If that is the case, a severe correction may be around the corner - it seems the market has a knack for confounding our best efforts to "get on the band wagon". So while you are enjoying the bullish trades, keep a tight stop engaged.

This bullish run forced me to hedge both of my condor positions yesterday, with $830 Mar calls for the Feb condor and the Apr $860 calls for the Mar condor. Today I closed the Mar 840/850 calls and rolled up to 850/860. The Feb RUT condor stands at a P/L of -$1,540 with delta = -$83 and theta = +$123. My Mar RUT iron condor stands at a P/L of -$2,000 with delta = -$46 and theta = +$44.

Have great weekend.

Traders appeared to be encouraged by Portugal's bond auction and opened trading this morning in the black and held that strong bias throughout the trading session. SPX bounced up against $1330 but could not break through this resistance level. SPX closed at $1324, up $12 and RUT tacked on a huge $17 to close at $810. This bullishness was a little surprising in view of the economic data out today. The ADP employment report came out with 170 thousand new jobs, but the analysts had predicted 200k. That causes some concerns about Friday's jobs report. The ISM Index came in at 54.1 for January, up slightly from 53.1 and construction spending increased 1.5% in December. These reports aren't negative, but they certainly aren't consistent with today's bullish run either.

Trading volume in the S&P 500 was up at 3.3 billion shares, but was down 3% on the NYSE. Trading volume was up 20% on NASDAQ. The VIX dropped almost one percentage point to 18.6%.

My Feb iron condor on RUT stands at a P/L of +$780 with delta = -$141 and theta = +$200. The 840 call delta is now up to 15. Senility apparently struck yesterday when I suggested applying the Two Sigma Rule on Friday to close the call spreads - I gave away a week somewhere! My Mar RUT iron condor spread stands at a P/L of -$540 with delta = -$72 and theta = +$88. Can the market stay motivated to continue this drive higher?

Many market observers are giddy about the market's positive gains since the first of the year, which I suppose is understandable after the year we had in 2011. But the last several trading sessions are setting up as another range bound trading situation. For the last nine trading days, we have stayed roughly in the range of $1310 to $1330. Note that on several of those days we have spiked down below $1300 and up above $1330 one day, but in every case, the S&P 500 has been pulled back into the range. SPX ranged from $1307 to $1321 today before closing down less than one dollar at $1312. RUT was flat on the day at $793. Trading volume was up today, probably due to end of the month "window dressing". 3.1 billion shares of the S&P 500 traded and trading on the NYSE was up 21%. Trading on NASDAQ was up 6%.

Today's dose of economic data weighed on the market. The Case Schiller Housing Price Index dropped again in November, this time down 3.7%. The Chicago PMI came in at 60.2 for January, down from December's 62.2 and Consumer Confidence also dropped to 61.1 in January from the earlier 64.8. The market is in an interesting place. It appears to be trapped: on the one side we have good corporate earnings and some economic data that isn't worsening and appears to be slowly healing (today's data withstanding). On the other hand, the economic data in the states isn't anything to write home about; our political wrangling and political malfeasance are at all time highs (how is it possible that Congress is actually considering legislation to make it illegal for Congressmen to trade on inside information? How did we get here?); and Europe hovers over everything like a black cloud.

But this ugly picture works well for delta neutral trades. My Feb RUT iron condor stands at a P/L of +$2,520 with delta = -$60 and theta = +$92. The Mar condor stands at a P/L of +$240 with delta = -$39 and theta = +$83. Most likely, we will close the Feb call spreads this Friday (Two Sigma Rule) and allow the put spreads to expire worthless.

The S&P futures were in the red this morning based on the same old European debt problems - and throw Greece's bond negotiations in for good measure. SPX opened and dropped to $1300 by mid-morning. But then it stabilized and traders started buying, steadily pulling the markets up to minimal losses for the day. SPX closed down $3 at $1313 and RUT closed down $6 at $792. The VIX spiked up in the morning, but dropped back to close at 19.4%, up less than a percentage point. Trading volume in the S&P 500 fell off to 2.6 billion shares, well below the 50 dma at 2.9B.

Personal Income was reported as rising 0.5% in December, a big improvement over the previous month's 0.1% increase. But personal spending was flat in December. We will get the Chicago PMI and the Case Schiller housing price index tomorrow; those numbers could be market-moving, but at this point it is hard to imagine much movement either way. The balancing act between the bulls and the bears is pretty close to even, but slightly tilted in favor of the bulls. It seems that when either group gets the upper hand, the buying or selling sets in to pull the market back. SPX has managed to stay above $1310 for eight sessions now, but has only closed above $1320 once. And note how the trading volume has steadily fallen off since SPX broke $1330 as the intraday high on Thursday. Stocks are cheap by many measures, but fear stemming out of Europe seems to be holding the market in check.

My Feb RUT condor stands at a P/L of +2,320 with delta = -$63 and theta = +$100. The Mar RUT iron condor stands at a P/L of +$200 with delta = +$200 with delta = -$34 and theta = +$79. This meandering market is good for these trades.

Fourth quarter GDP came in at an annualized growth rate of 2.8%, but analysts were expecting 3.2%, so that set the markets off into negative territory from the beginning today. SPX spent most of the day in the red and then made a run upward during the last hour, but could not hold a positive gain for the day. SPX closed down $2 at $1316 and RUT closed up $6 at $799. Trading volume was down with 3.0 billion shares of the S&P 500 stocks changing hands. Trading volume was down 6% on the NYSE and was down 14% on NASDAQ.

The University of Michigan Consumer Sentiment Survey reported a value of 75.0 for January, up modestly from December's 74.0.

My Feb iron condor on RUT stands at a P/L of +$1600 with delta = -$98 and theta = +$110. RUT's relative strength versus SPX is a bullish sign for this market, but not so good for our Feb 840/850 call spreads. As of the close today, we could have closed our call spreads for a small gain or break-even and the delta of the 840 calls is only 12, so this position is still pretty solid. Many analysts expect the last couple of days of January trading to be bullish due to institutional buying - we'll see what Monday brings.

Have a great weekend.

The markets opened this morning and continued yesterday's rally after Bernanke promised another couple of years of cheap money, but the enthusiasm quickly faded. Markets turned down late morning and spent the balance of the day in the red. SPX lost $8 to close at $1318 and RUT lost $3 to close at $793. Since the first of the year, the averages have made strong gains, so much so that many technical indicators have been flashing overbought. This has left many analysts predicting a correction while the markets pushed higher. There are many factors at play here, pushing the markets in conflicting directions. Late January after a strong bullish run is often a positive time for the markets due to institutions wanting to show clients they are long the bull market and haven't been left behind. And, Bernanke's promise of easy money certainly helps. And the overall market averages are cheap by most any historical measure. But then we have the prospect of a Greek default and the rest of the European sovereign debt crisis weighing us down. And we may have a large number of traders who are anxious to lock in some of the gains they have enjoyed so far this year, especially after the beating most institutions and hedge funds took last year. And we have the historical pattern of a decline in late January after the so-called Santa Claus rally. The bottom line is that it is awfully hard to predict the end result of this confluence of forces.

Trading volume actually increased a bit today with 3.5 billion shares of the S&P 500 trading; volume increased 4% on both the NYSE and NASDAQ. The VIX increased about a third of a percentage point today, closing at 18.6%. But intraday, the VIX actually dipped below 17%. It doesn't appear that the large institutional traders are too concerned about a correction. Should I be reassured or worried by that measure?

Today's dose of economic data wasn't terrible, but it wasn't inspiring either. Initial unemployment claims reported out at 377k, up from last week's 356k. Durable goods orders rose 3.0% in December, but they rose 4.3% in November. And new home sales declined from November's 314k to 307k in December. So our economy seems to be just plugging along with minimal progress, but not sinking further either.

My February RUT iron condor at 590/600 and 840/850 stands at a P/L of +$2,080 with position delta = -$72 and position theta = +$97 on 20 contracts. It will be interesting to see how the balance of January plays out.

As the markets have continued this slow steady climb into 2012, many analysts keep looking for a correction, but the markets just keep rising. Bernanke then throws the markets a huge surprise today by announcing that the Fed will maintain these record low interest rates through 2014 - wow! This is unprecedented. Fed watchers were shocked the last time the FOMC announced a specific time period for interest rates remaining low - why extend that by two more years? Now the question you have to ask is: what does the Fed see down the road that required such a surprising announcement? Do they see more danger from Europe's sovereign debt crisis than the markets have priced into stocks? Do they see a new recession here in the states or just continued slow to minimal economic growth?

SPX began the day in red ink, but broke out to the upside in the early afternoon, closing at $1326, up $11. RUT gained $7 to close at $796. VIX dropped almost another percentage point to 18.3% and spiked down as low as 17.2% intraday. Trading volume jumped up today with 3.4 billion shares of the S&P 500 stocks trading; trading volume rose 16% on the NYSE and rose 20% on NASDAQ. When the Fed gives you free money, you have no choice but to buy.

My Feb RUT condor stands at a P/L of +$1,780 with delta = -$86 and theta = +$102. The 840/850 call spreads remain at about one standard deviation OTM, so no adjustment is necessary - yet.

It appears that we are in one of those classic situations where everyone believes a correction is in order and that the problems in Europe have to contain our market's advance. The market usually finds a way to confound the majority viewpoint...

The continuing Greek negotiations to restructure their debt don't appear to be nearing a resolution and this weighed on traders at the open this morning. But markets traded stronger through the day and much of the losses were recovered by the close. SPX didn't quite recover all of its losses, closing at $1315, down $1. But RUT bounced around 11 am ET and drove to a positive finish at $788, up $5. This divergence in SPX and RUT would be considered bullish by most analysts. The mid-cap stocks typically lead bullish recoveries. Trading volume remains weak with 2.8 billion shares of the S&P 500 trading; this is just below the 50 dma. Trading volume declined 2% on the NYSE and dropped 3% on NASDAQ.

No economic reports were released today. The VIX rose a bit but remains relatively low at 18.9%.

My Feb iron condor on RUT stands at a P/L of +$2,220 with delta = -$60 and theta = +$89.

I took a flyer today and bought the AAPL Feb 460/470 call spread in anticipation of AAPL's earnings announcement this evening. And AAPL didn't disappoint; all of their results exceeded expectations. It was a risky trade, but home runs are fun when you get them.

The markets continued their strong bullish run this morning, but continued chatter about the negotiations surrounding Greek bonds, and more importantly, the lack of progress, appeared to wear down traders. So the markets plunged into red ink around noon and spent the rest of the day trying to climb out of that hole. SPX tacked on less than a dollar to close at $1316 while RUT closed down $2 at $783. The price action on both SPX and RUT were of the classic doji candlestick variety - the mark of indecision. This candlestick often foretells a market reversal, but not necessarily always. At a minimum, it suggests that bullish sentiment and bearish sentiment are roughly balanced at this point. The markets have had a strong run so far this year, so a little pause might be in order. The doji may not indicate a reversal as much as a pause.

The VIX increased less than half a percentage point on this minor pullback, closing at 18.7%. Other than the news out of Europe, there was no significant economic news today. In fact, we won't have any significant economic reports until Wednesday with FOMC and pending home sales.

Trading volume was down today with the S&P 500 trading right at the 50 dma of 2.9 billion shares. Volume declined 20% on the NYSE and declined 14% on NASDAQ.

My February iron condor on RUT stands at a P/L of $2,460 with position delta = -$47 and position theta = +$73. Most of the gains in this position are coming from the put spreads, although the 840/850 call spreads could be closed for a small profit now. But the delta of the short 840 calls is less than 7, so those spreads are quite safe for now. My perception is that a strong earnings season has motivated much of the bullish run this month. Will the market's attention return to Europe after the announcements begin to wane?

The markets took a breather today. SPX gained $1 to close at $1315 while RUT closed at $785, up $2. To my surprise, VIX fell almost two percentage points to close at 18.3%. Wow! The markets have really forgotten about the European debt issues. I can't get over how quickly this market posture has changed, and with little or nothing substantially different in Europe. Trading volume was mixed with a slight decrease in the S&P 500 trading down to 3.3 billion shares; trading on the NYSE rose 13% and trading on NASDAQ declined 1%.

The only economic news of the day was existing home sales for December, which were up to 4.61 million from the previous 4.39M.

RUT settled at $780.62 and SPX settled at $1313.93 for January. That officially completed my second January iron condor with a 7% gain as the 670/680 put spreads expired worthless. The Feb RUT condor stands at a P/L of +$2,460 with delta = -$51 and theta = +$57. Thus far, the Flying With The Condor™stands at a gain of 5% for 2012, as compared to a gain of 4.5% on SPX, so we are managing to stay ahead of the broad market so far this year (these results only include closed positions).

Well, I have to go clear out some snow; we are in the middle of winter storm here. Have a pleasant weekend.