As our President paints a "sky is falling" scenario over the sequestration his party set in motion, this market just continues to climb higher. Market analysts continue to label this market "overbought" and predict a correction, but the markets haven't checked their email. SPX climbed another $11 today, closing at $1531. RUT is trading even stronger, up $9 at $932. Trading volume on the S&P 500 isn't available as I write this, but preliminary data on the exchanges suggests trading volume declined today. Normally, a decline after expiration Friday would be normal, but trading volume on Friday was unusually low. No one can deny the strength of this bullish rally, but the volume has been anemic.

There wasn't any significant economic data to propel this market today; the only report I saw was the National Association of Home Builders Index coming in at 46, down slightly from January's value of 47.

My March iron condor at 810/820 and 950/960 on RUT stands at a P/L of -$790 (-4%) with position delta = -$132 and position theta = +$108. I hedged the position today with some Apr 950 calls.

It seems to me there is increasing evidence that sequestration will occur March 1 and maybe it isn't as big a deal as we have been led to believe. I never ran any organization that couldn't take a few per cent off the top without causing any real damage. After all, we are talking about 85 billion dollars in cuts - remember the scale of this government behemoth - it is running over a trillion dollars (1000 billion) in the red each year. 85 billion is nothing. Therefore, the prospect of this Washington debate impacting the markets may have been overblown... but we'll see. I remain cautious.