Many of us have been expecting a pull back for some time but it seemed that every moment of weakness in the market was met with renewed buying.The markets opened down a bit this morning and about 10 am ET, it appeared that the buyers were going to buy the dip once again, but then the markets turned south and never looked back. SPX lost $13 to close at $1282 while RUT was hammered with a $21 loss to close at $787. Trading volume was above average but lower than yesterday with 3.4 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE was down 5% but it was up 5% on NASDAQ. Housing starts for December fell 4.3% to 529k; 550k were expected. But December's building permits jumped 17% to 635k, the highest level since March 2010.

It isn't clear to me what precipitated this sell off. AAPL's and IBM's earnings announcements were stellar. GS's earnings beat expectations but they missed on revenues. There wasn't any obvious dreadful news to account for the selling. I was busy with some other work and had CNBC muted all day; I should have tuned in; I am sure the talking heads had some nice packaged answers.

My Jan SPX iron condor has been teetering on the edge of disaster for a few days, so when the market dipped a bit this morning, I took the opportunity to close my 1300/1310 call spreads. Of course, if I had waited, I could have safely allowed those spreads to expire worthless. Assuming the 1210/1220 put spreads expire worthless, this position will lose $899 on 20 contracts or 5%. I hate that rear view mirror.

My Feb RUT iron condor is now in nearly perfect position with a P/L of +$1900, delta = -$14 and theta = +$81. And that sums up delta neutral trading rather well - some trades work out as planned and some don't. The trick is minimizing those inevitable losses. It is disappointing to start the new year with a loss, but our returns on the Feb condor may easily compensate for the losses in January. And that underscores the importance of risk management.