The markets opened pretty flat this morning and traded sideways until late afternoon when they sold off dramatically. SPX traded down to $1514 before the bulls came to the rescue once again and recovered most of the losses to close at $1520, down $2. RUT lost $1 to close at $923. Even though the markets traded off, traders still see any pullbacks as buying opportunities. This dipping back to about $1514 and then closing around $1520 is becoming a common pattern of late for SPX. I think this has two messages: 1) this market has traded very high very fast, so a little breather is healthy, and 2) whenever there is a pullback of any kind, buyers appear, so this bullish trend still has legs. Trading volume was flat today with 2.8 billion shares of the S&P 500 stocks trading. Trading was up 9% on the NYSE, but down 3% on NASDAQ.

I keep thinking the impending March 1 deadline for sequestration will take its toll on this bull market, but thus far, traders seem to be trusting that a deal will be struck at the last minute. Or maybe there is a school of thought that the sequester will be good for us by forcing the spending cuts Congress seems unable to seriously contemplate.

The Empire manufacturing survey reported out at +10.0, an improvement from last month's -7.8. Industrial production for January dropped slightly by 0.1% and capacity utilization was flat at 79.1%. The University of Michigan consumer sentiment survey came in at 76.3 for February, up from 73.8 in January.

The settlement value for SPX for February expiration is $1523.06 and RUT settled at $928.61. Those of you who gambled on leaving our Feb 930/940 call spreads open won your bet, but that was a risky play. My Feb iron condor on RUT ended at a +5% gain - not wonderful, but I was happy to salvage that gain in this incredibly bullish market.

The exchanges will be closed Monday. Enjoy your long weekend.