The markets opened strongly up this morning in spite of a disappointing ADP jobs report of a loss of 10,000 jobs. The August ISM Manufacturing Index reported out at 10 am and surprised traders with a value of 56.3 for July, up from 55.5 for June. This fueled the market's rise for the balance of the day. Undoubtedly, the market's strong rise this morning was fueled by traders covering their short positions, but it was a surprisingly strong day for the markets. The major indexes closed at or near their highs for the day. SPX bumped up against the 50 dma at $1081 and closed at $1080, up $31. RUT ran up $23 to close at $625, near its 50 dma at $628. Trading volume was down a bit from yesterday, with a 7% decline on the NYSE and a 3% increase on NASDAQ. The S&P 500 stocks traded 3.9 billion shares, slightly down from yesterday but still above the 50 dma.

Both RUT and SPX convincingly broke out of the trading ranges of the past several days; if SPX can break through its 50 dma at $1081, the next resistance level will be $1100. RUT's next strong resistance level is in the area of $640 to $645.My Sept RUT condor is strongly positioned with a P/L of +$1,950 with position delta = +$16 and position theta = +$94. The "sweet spot" for this condor is around $640; both spreads are now greater than two standard deviations OTM with 15 days to go. The Oct condor is being stressed by this large upward move. It stands at a P/L of -$280 with position delta = -$56 and position theta = +$90. The delta of the $690 call is up to 14. The reduction in the theta/delta ratio shows the weakening of this position as RUT rallies. It will be telling if the traders open the day taking profits tomorrow, as has been typical of recent rallies. And, of course, the bogeyman of the unemployment report is lurking around the corner.