The markets rallied pretty strongly today. SPX tacked on $9 to close at $1373 while RUT gained $6 to close at $805. Volume ticked up modestly with 2.7 billion shares of the S&P 500 trading; trading volume on the NYSE edged up 4% and trading volume on NASDAQ was up 2%. The VIX moved down to 16.2%. I don't have a precise tally, but it seems to me that the earnings reports thus far in this cycle have not been compelling; most, if not all, of the guidance has been pessimistic or at least cautious. Bernanke's recent testimony underscored the weakness of the economy. So why is the market trading upward? It seems the only possible answer is the expectation that the Fed will begin a new round of quantitative easing and boost the economy and the markets. How many days will pass without Fed action before the markets trade back downward?

SPX hit $1375 today before pulling back to close at $1373. $1375 is where the market stalled in early July. Can it break that resistance level this time? I still believe we have too many headwinds to move this economy and the markets forward. Even if the Fed rides to the rescue once again, how much effect will it have? On the other hand, most corporations have become very lean and efficient the past few years, so earnings may not be growing, but they aren't collapsing either. My expectation is to see the market trade largely sideways between these relative positives and negatives. But the boys and their computers will inject a lot of chop and volatility into the picture, so be careful. It is going to be a rough ride.

My July iron condor continues to coast into expiration. The Aug positions stands at a P/L of +$240 with delta = -$91 and theta = +$112. The 850/860 call spreads remain about one standard deviation OTM, so no adjustment is required as yet. But the position is showing the effects of the recent rally.