After such an enthusiastic beginning to the new year last week, it seems traders' enthusiasm is waning. SPX closed at $1462, down $5 and RUT lost $3 to close at $876. Trading volume was flat to declining with 2.3 billion shares of the S&P 500 stocks trading today. Trading volume was flat on the NYSE and dropped 3% on NASDAQ. VIX jumped up a bit this morning to 14.5%, but settled back down to 13.8%, near the open this morning.

Alcoa kicks off the earnings season tomorrow and estimates of earnings for this quarter have been steadily dropping. Fourth quarter earnings projections back in October were for growth of 9.2%, but that has dropped to an anemic 2.7%. That is starting to temper traders' appetite for risk. This series of earnings announcements could be taken as opportunities to sell and lock in gains, but that action may largely rest on the guidance given during the reports. The back drop of the debt ceiling fight that is starting to heat up may temper guidance.

If the early sound bites are meaningful (maybe it is empty posturing), the parties on both sides of the aisle are digging in for a serious fight over the debt ceiling. I thought the recent tax battle was bad enough, but this is shaping up as an even nastier battle. Unfortunately, significant numbers of both parties are dissatisfied with the last deal, so this negotiation is starting out in the hole as leaders on both sides try to appease the various factions of their parties. I am starting to think the network hosts of the Sunday political talk shows are part of the problem. Have you noticed how they like to goad whomever they are interviewing into taking an extreme position and drawing a line in the sand? It makes for great headlines, but I don't think it serves us very well.

Turning to the SPX chart, a technical analyst has to take note of the resistance level at $1465 set back in mid-September and tested in early October. For the past several trading sessions, it appears as though SPX has been struggling to break through that resistance. It is interesting that the trading volume on SPX has declined every day in this new year. It popped nicely on January 2, but SPX volume has been steadily retreating since then.

My January condor position continues its underwater journey; the higher theta as we near expiration is helping work off some of the losses, but the position will be a loss when it is all said and done.