The markets bounced back into positive territory today with SPX moving up $11 and closing at $1557. RUT was more muted with a two dollar increase to $946. Trading volume continues to be weak with 2.2 billion shares of the S&P 500 stocks (the 50 dma is 2.5B). Trading on the NYSE dropped 10% and trading volume on NASDAQ dropped 1%.

A large proportion of financial news was devoted to the Cyprus banking crisis this week. Traders seem to have discounted the negative effects since the markets were consistently in positive territory today, even though no resolution of the Cyprus problems is expected until early next week. SPX opened higher this morning, and then traded higher all day, including a last minute spurt that took it near its intraday highs for the close. SPX came close to completely recovering all of the losses from yesterday. That doesn't sound like a market that is worried about Cyprus.

The bullish strength underlying this market was demonstrated once again this week. Given the chorus of analysts and gurus calling for correction, this seems all the more surprising. Perhaps the recent bullish excesses will be gradually absorbed via some sideways consolidation action. In spite of all of the wringing of hands this week, SPX never came close to its solid support level at $1530.

Volatility dropped a bit today with about a half point drop in the VIX, down to 13.6%. Historically, this remains a low volatility environment. By comparison, the volatility index for the Russell 2000 index, RVX, ranged from about 24% to 32% last year, but has remained largely below 20% this year, with only two exceptions in late February. RVX closed at 17% today.

My April iron condor on RUT at 880/890 and 990/1000 remains underwater by about 13% with delta = -$12 and theta = +$108. With both spreads being greater than one standard deviation OTM with less than a month to go, this position is in moderately good shape. However, the adjustments to date have consumed much of the potential profit for this position.

Enjoy the weekend.