The waiting game continues, but one of the big risk factors was taken off the table today. The German high court refused to grant the injunction to stop Germany's participation in the ESB (European Stability Mechanism). But, and that's a big "but", the court limited Germany's participation to 190 Euros without going back to the Bundestag (the equivalent of our House of Representatives) for approval. The ESM has not actually been formally approved by the Euro Zone countries, so any number of snags may appear in that process. Germany is the largest contributor to the ESM and many observers expect the required contributions to increase as the detailed plans are nailed down. So the European debt crisis is far from over, but the problem is sufficiently deferred for the markets to move on for now. The markets have a notoriously short attention span.

Next on the agenda is the FOMC announcement and news conference tomorrow. Personally, I think our biggest risk was passed by without any damage today (the German court decision). Depending on whom you speak with, some are claiming most traders and economists are expecting QE III is a "done deal"; others report just the opposite. That tells me that observers are split on whether QE III is needed or appropriate, so I don't expect a huge market move as a result of tomorrow's announcement. A great deal of the market's rise over the past several weeks is probably best attributed to Draghi's comments and anticipation of QE III, so we may well give back some of that if Bernanke delivers the usual message, "we stand ready to intervene if necessary..." But given today's gift of taking the European debt crisis off the radar temporarily, I don't expect a Bernanke disappointment to be devastating. On the other hand, the announcement of QE III could trigger a "sell the news" event.

SPX gained $3 to close at $1437 and RUT also gained $3 to close at $845. Trading volume dropped off a bit to 2.5 billion shares of the S&P 500, but remains above the 50 dma. Trading rose 6% on the NYSE and increased 5% on NASDAQ. The VIX dropped almost one percentage point to 15.8%.

My Sept condor position remains underwater at a P/L of -$3,940 with delta = -$93 and theta = +$418 (huge theta!). A big move up tomorrow could trigger closing the call spreads and lock in a loss for this position. The Oct condor stands at a P/L of -$810 with delta = -$62 and theta = +$79. The delta of our short calls is up to 21 so the pressure on the call spreads isn't too severe so far.

Get your popcorn ready for the show tomorrow.