I have certainly been surprised that this rally has been so consistently strong with little or no pullback - well, just when the market has convinced us to close all of our shorts, it drops a few percent! Some would argue whether the last few days of trading constitute a correction, but that is semantics in my book. The Russell 2000 Index (RUT) hit a high of $551 in November of last year and today's close at $548.18 is certainly in the neighborhood of that support level; also note that the RUT was consolidating at this resistance level from about July 23-30 before moving higher. So now that $550 level is serving as support. I would not say today's action constituted a definite break of support because today's trading was pretty tightly contained in the $547-$550 range. If it does break through, the next expected support level would be $535, the high that was set in early June.

A global sell-off was triggered by a lower than expected GDP report from Japan; natural gas and crude both closed lower; Gold broke through its 50 day moving average. The question for market forecasters now: is this just a minor pull back in a strong rally? Or, have the markets turned pessimistic about the state of the economy and we are headed lower?

My August iron condor has been sitting on the edge of being closed out for several trading sessions, but the last two days of trading have pulled it out of danger. The short $590 calls now are 3 standard deviations OTM and the short $490 puts are over 4 standard deviations OTM. As long as they remain > 2 standard deviations OTM, I will allow those positions to expire worthless. The position P/L = -$740, with delta = +$14 and theta = +$186.

On the other hand, today's downward action forced me to adjust my September iron condor. The short $510 put was sitting at a delta > 20 this morning, so I bought one Oct $510 put for $15.90 to hedge the position. This position now consists of 10 contracts of the $620/$630 calls, 10 contracts of the $500/$510 puts, and one contract of the Oct $510 puts. I wanted to add another ten contracts to this position today, but today's downward move was too great, so I will wait and see if support is broken tomorrow. The position P/L = -$30, with delta = -$9 and theta = +$31.