The markets bounced back a bit today, seemingly reaffirming the sideways trading range of the past few weeks. SPX gained $7 to close at $1178. RUT also gained $7 to close at $1103. Volatility backed off a bit with the VIX declining almost one point to 12.4%. Trading volume was flat to down from yesterday with 2.1 billion shares of the S&P 500 trading. Volume rose 1% on the NYSE and dropped 16% on NASDAQ.

SPX has been successfully using the 50 dma as support, bouncing off both yesterday and today. But the 50 dma is steadily rising, compressing SPX between its all-time highs and the 50 dma. Sooner or later, something has to give. RUT has been trading much weaker than SPX, trading way below the 200 dma. Over the past few days, it appears RUT is bouncing off the support set by the low in early February around $1093. The market is clearly weak, but the key question is whether the markets will consolidate and thereby relieve some of the excesses from the strong bullish gains of the past several months or whether we will see a stronger correction. I am starting to worry that it may be the latter.

The weakness in RUT worries me a bit, so I closed my May put spreads yesterday. SPX settled at $1870.76 and RUT settled at $1094.72.  The May call spreads will expire worthless, resulting in an 11% gain for my May iron condor position on RUT.

Have a great weekend.