As you know, I have continued to be surprised by this strong rally in the markets because I still see significant current economic problems and I am concerned about the future implications of the huge federal spending spree. I read and listen to various analysts with similar viewpoints. But today, it suddenly hit me: when everyone is bearish, is that the classic contrarian bullish signal? Since my favored trading strategies are delta neutral, predicting tomorrow's market isn't really relevant to the month to month trading of this blog, but the overall market trends are relevant to my long term investments.

Weak retail sales held the market down through most of the day, but some strong buying pushed the indexes higher in the last hour of the day's trading. RUT closed at $575 and the S&P 500 closed just below $1013. The markets appear to be strongly holding these general levels and even making small advances. The absence of a significant sell-off after such a strong and quick run upward suggests a strong bullish bias in this market.

My August RUT iron condor stands at a P/L of -$2,570, delta = -$114 and theta = +$263. The accelerating theta decay is helping us stay in this position in these closing days of the trade. As I have said previously, this position will be a loser; the question is how much of a loser? Our "line in the sand" is to keep the loss below the original credit of $4,000.

Our freshly minted September RUT iron condor at 500/510 and 620/630 stands at a P/L of -$70, delta = -$26 and theta = +$59. I am looking for the opportunity to add another ten contracts to this position, but I am waiting for RUT to either 1) trade enough higher so I can add 640/650 on the top side, or 2) a slight pullback that would enable me to just add to the current strikes.

I will be traveling tomorrow to attend a wedding in Colorado, and my blog will return on Monday.