The bulls and the bears appear to be at a stalemate here. For several days now, the market has opened strongly and spurted upward, but then quickly reversed downward. Much of the news and CNBC commentary throughout the day has been focused on Bernanke and the FOMC. Everyone is consumed with the Fed tapering their QE programs and arguing about whether that tapering will begin in September.

A good example was this afternoon when one of the FOMC members was quoted as saying that tapering wouldn't begin in September. The markets popped up a bit on that news, but it didn't take long before those gains were lost and the market actually dipped lower. In the meantime, it appears as though traders are sitting on the sidelines, reluctant to commit additional capital to this market. SPX lost $9 today, closing at $1685. RUT closed down $4 at $1048. The VIX increased about half a point to 12.9%.

Trading volume continues to be very low and this is actually consistent with the stalemate view expressed above. Only 1.8 billion shares of the S&P 500 stocks traded today and the 50 dma stands at 2.3B shares. Trading on the NYSE decreased 3% and trading volume dropped 1% on NASDAQ.

The Producers Price Index, PPI, was announced this morning for July and, surprisingly, was a big fat zero. I would have thought we would be seeing the early signs of an inflation surge with all of this money being pumped into the markets. I think this reflects the extreme weakness of this economy; it is much weaker than reported in the media.

My Aug condor position at 970/980 and 1080/1090 stands at a 7% loss, assuming both spreads expire worthless this weekend, and that appears likely at this point. Fortunately, my Sept condor position stands at a P/L of +$1620 or +10% with position delta = -$15 and position theta = +$68. This is a good example of managing the risk on each trade so that losses are constrained to be of the order of the gains in a good month.

So now we return to the market watch. Try not to fall asleep.