The markets shocked many traders last Thursday with that huge spurt upward based on what many would call vague promises by Draghi - it was the equivalent of, "Trust me. I'll fix it somehow." Perhaps even more of a surprise was the modest uptick Friday; I expected some profit taking after that strong rally. But today, traders found it hard to press the bullish case. The markets sluggishly trudged sideways most of the day and then weakened as we went into the final hours of trading. SPX lost $9 to close at $1429 while RUT lost $3 to close at $839. Trading volume fell off with 2.4 billion shares of the S&P 500 stocks trading; this is right at the 50 day moving average. Volume on the NYSE dropped 12% and trading on NASDAQ fell 9%. VIX increased nearly two points to 16.3%.

No economic news of any significance was released today. Everyone is focused on Wednesday's Fed announcement. Some analysts believe the markets have priced in the next round of quantitative easing, so an announcement of QE III may not greatly boost the markets - in fact, it could be a "sell the news"event. But what if Bernanke continues with the recent message of "we'll step in when we deem it necessary"? Will markets just wander sideways in disappointment or will that set off a profit taking selling spree? Bottom line: Wednesday could be a down market day whichever way Ben turns. We aren't likely to see much movement in the markets until the FOMC announcement.

My Sept iron condor on RUT is limping along with a P/L of -$3,810 with position delta = -$15 and position theta = +$323. Our adjustments have moved this position back to delta neutral and theta decay is starting to ramp up as expiration approaches. But this condor is in a precarious spot; in theory we could salvage a gain, but most likely we will be fighting to minimize the loss. The Oct condor position has also been hedged and stands at a P/L of -$260 with position delta = -$53 and position theta = +$70, so this condor is in pretty good shape.