The markets opened slightly up this morning and everyone breathed a sign of relief. Then the bottom fell out. SPX fell from the high of $1796, achieved in the first hour of trading, to a low of $1773 a little after 12:30 ET. Then it recovered to an afternoon high of $1794 before selling off into the close at $1782, down $9 on the day. RUT lost $16, closing at $1128 after trading as low as $1121. The difference on the RUT chart is that it never bounced back up into positive territory.  The sell-off into the close on both SPX and RUT is not a good sign. I would have thought today and tomorrow would have given us relatively flat days of trading in advance of the FOMC policy announcement on Wednesday. But a serious bout of selling dominated today's markets. Last week's declines are trickling through the markets and traders are taking their profits. The intraday highs this afternoon were taken as opportunities to take profits go to the sidelines. It remains to be seen whether the Fed's statements will calm the market or send it plunging further downward.

SPX bounced today almost precisely at the support level set by market highs in late October and early November ($1772). Today's close is just above the 4% correction level at $1776. The highs from late October on the RUT chart ($1123) just happen to coincide with a 5% correction. RUT's low today was $1121. So both SPX and RUT caught themselves in the downward slide this afternoon at the highs from October. This represents a larger pull back for RUT because it continued to set new all-time highs after SPX had stalled. That brings us to the key question: will a 5% correction be enough? I don't think we will receive an answer to that question anytime soon.

The only economic data reported today were new home sales for December, coming in at an annualized rate of 414k, down from November's 445k. The next significant economic news for this week comes Wednesday afternoon from the FOMC.

My Feb RUT iron condor only consists of the 1210/1220 call spreads for now (I will likely re-establish the put spreads when the smoke clears). So that position stands at a net gain of $760 on 20 contracts or +4%. If I do nothing and the call spreads expire worthless, the Feb position will close at a 6% gain - not bad for a month like this.

We return to the market correction watch tomorrow. $1772 is a key support level on SPX. If that fails to hold, the next obvious support on the chart is at $1729, near the 7% correction level.