Throughout history, man has tried to predict the future by reading tea leaves and all sorts of things. But today, we traders are sophisticated; we read Bernanke. Traders listened to every word of his testimony before Congress today and interpreted every gesture and expression. Consequently, the markets swung back and forth dramatically - must have been fun for the day traders. SPX closed at $1364, up $10 after trading as low as $1345 and as high as $1365. RUT closed up $3 at $799. 

Bernanke's gloomy view of the economy fueled speculation of another round of quantitative easing, so the markets ultimately traded up today. Bernanke is still on the hill tomorrow, so we may be in for more of this volatility, but it is unlikely he will surprise the markets with anything new tomorrow. My favorite take-away from today was Senator Schumer telling Bernanke to "get to work" to solve these economic problems; isn't this Senate the body that has failed to propose a budget for three years now? And we pay these people?

Trading volume popped up with 2.6 billion shares of the S&P 500 trading; trading volume on the NYSE was up 17% and volume on NASDAQ was up 23%. The VIX traded below 17%, closing at 16.5%. Industrial production increased 0.4% in June and capacity utilization inched up to 78.9% in June, but I don't think traders noticed these reports; all eyes were on Bernanke, hoping for a Fed bailout.

My July iron condor continues to cruise toward expiration with both spreads several standard deviations OTM. The Aug iron condor on RUT at 650/660 and 850/860 stands at a P/L of +$520 with position delta = -$71 and position theta = +$103. As the delta indicates, we are getting some mild pressure on the call spreads, but we are still far from triggering an adjustment. The Bernanke watch continues...