Traders breathed a sign of relief today as the markets essentially recovered all of the losses from the extreme lows yesterday. SPX closed at $1588, up $15 and RUT gained $10 to close at $961. SPX's close today is approximately at yesterday's opening price. SPX plunged to $1560 yesterday and then recovered about half of that carnage yesterday afternoon. Today it recovered the remaining losses.The VIX pulled back almost 2 points to 18.5% and trading volume fell markedly with 2.5 billion shares of the S&P 500 stocks trading today, right at the 50 dma. Trading volume on the NYSE dropped 16% and volume on NASDAQ dropped 18%.

A slew of positive economic data probably helped this recovery. Durable orders gained 3.6% in May and the Price Schiller housing price index increased 12.1% in April (a record for that indicator). Consumer confidence increased  from 74.3 to 81.4 for June and new home sales increased by 10k for May. All in all, this is probably the best set of economic data in quite a while. It isn't too surprising that these data encouraged traders.

Turning to the SPX chart, the index is bouncing just below resistance at $1600. The 50 dma is at $1619, so we have some significant progress that must be made before one can declare the correction is over. On the RUT chart, the corresponding resistance level is $955, so it was broken today. The RUT 50 dma = $966. But the simplistic choice is either 1) heading lower for a more severe correction, or 2) heading back into strong bull market mode. That ignores the very real (and I think more probable) possibility of a choppy sideways market for the balance of the summer. I think the first couple of weeks of earnings announcements may set the tone for this market.

My RUT July iron condor position stands at a net gain of $1,740 or +10% with position delta = +$28 and position theta = +$81. With a theta/delta ratio of just under 3:1 and about three weeks to go to expiration, this position is very strong.