The markets were buoyed today by the lack of surprises from the banking regulations revealed in Basel III; this boosted European banking stocks and also spread to our markets. Some positive economic data from China helped the markets as well. SPX closed at $1122 for a gain of $12 while RUT ran even harder to close up $16 at $652. An even more bullish sign was the increased trading volume across the board with the S&P 500 stocks trading up to 3.3 billion shares, just below the 50 dma at 3.5 billion shares. Trading on the NYSE increased 21% and increased 15% on NASDAQ. It is also noteworthy that both SPX and RUT blew through their 200 dma today - another bullish sign.

My Sept RUT iron condor is sitting at essentially full profit with both spreads far OTM; the deltas of the short options are less than one. I began to adjust my Oct RUT iron condor today and it now stands at a P/L of -$785 with position delta = -$74 and theta = +$121. If this bullish trend continues tomorrow, more adjustments will be required to keep this position out of trouble.

The analysts at iVolatility.com have identified a head and shoulders pattern on the SPX chart (left shoulder at $1150 back in January, the head at $1220 in late April, and the right shoulder at $1131 in late June). Since the neckline is at $1042 and the SPX failed to break through the right shoulder in July and only made it to $1125, they see SPX trading in the range of $1042 to $1125. By this analysis, if we see SPX break through $1125 (came close today), we may be headed higher; on the other hand, a break down through $1042 would signal a bearish trend - food for thought.