Markets traded up again today after an extremely strong Friday, but volume fell off even further. SPX gained $3 to close at $1394 and RUT closed at $794, up $6. But trading volume fell to 2.2 billion shares of the S&P 500; trading on the NYSE decreased 15% and volume fell 12% on NASDAQ. SPX was up higher during the trading session, but gave back about half of its gains in the last half hour of trading. RUT ran as high as $797 before pulling back. That $797 level was the high on July 29 and 30 before the markets traded back down in the last cycle. That raises the question of whether this market can trade higher from here. Perhaps traders see the next FOMC meeting in September as too far away, so they are pulling back in their exuberance based on expectations of another round of quantitative easing. Declining volume at least supports that thesis. VIX remained essentially unchanged at 16%.

No economic news or reports came out today and it looks like a slow week for significant economic data being released. But Europe is the wild card; who knows what might happen or what Mario might say from day to day?

My Aug iron condor on RUT is up $2,340 on 20 contracts with position delta = -$22 and position theta = +$83. My Sep condor stands roughly at break-even with position delta = -$74 and position theta = +$92.

It is said that markets love to climb a wall of worry. If so, this market should have higher to go because we certainly have plenty to concern us: our weak economic recovery, the prospect of a second recession, Europe's sovereign debt situation leading to a global economic malaise, etc. My view is that we will continue with these mini-cycles up and back down with little forward progress. I always get cautious as I enter the August to October time period - it seems like bad things tend to happen this time of the year.