The markets didn't display the classic "dead cat bounce" today after yesterday's bloodbath, but the major indexes traded modestly higher most of the day. But news that Moody's will be reviewing Spain's debt for a possible downgrade sent the markets lower in the last hour of trading. The Chicago PMI came in at 59.1, down form last month's 59.7 reading. The ADP employment report sees 13k more jobs, down from an increase of 57k last month. Most analysts have gloomy expectations for tomorrow's unemployment claims data and Friday's unemployment rate announcement. Softening of any of this data will confirm the fears of a double dip in the economy. Some of the market's influential analysts (Dennis Gartman, et al.) see the news from the G20 summit of cutting spending together with increased taxes as a lethal prescription likely to drive the world into a deeper recession. President Hoover is credited with the same policies creating the Great Depression in the thirties. Perhaps this recent rash of market weakness reflects that viewpoint.

The Russell 2000 Index (RUT) closed down $6 at $609, just above the support level at $607 set June 8th. If RUT breaks through this support level, the next stop is much lower at about $580. SPX closed at $1031, right in the support range of $1020-$1030 set back in Oct and Nov of 2009. Similar to RUT, a break-out below this level may not find support until around $980 from August of 2009. Trading volumes dropped from yesterday's high levels; trading on the NYSE dropped 13% and it was down 21% on NASDAQ. Trading the shares of the S&P 500 dropped back to 4.3 billion shares, below the 50 dma at 4.9 billion shares.

The Sept puts are nicely holding up the P/L of my Aug iron condor on RUT: P/L = +$180, delta = -$6 and theta = -$20. The delta of my short Aug 560 puts stands at 26. If that exceeds 30, I will close the put spreads and hold the long Sept puts. Play all of your positions very defensively; the mood of this market is decidedly bearish - I doubt that Friday's unemployment report will be greeted positively.