The unrest in Libya and the prospects of oil supply disruptions worried traders today and they sold stocks throughout the day to lock in gains and lessen their risk exposure.  SPX lost $27 to close at $1315 and RUT traded down to $822, a loss of $22. Solid support for both indexes stands at $1300 and $810, respectively. Traders will be watching those levels closely. The Conference Board's Consumer Confidence Index rose to 70.4 from last month's 64.8, and the Case Schiller Housing Price index dropped 2.4% for December; the confidence index value is the highest reading in about three years, but the unrest in the Middle East overshadowed everything else. Crude oil rose 6% to close over $95/barrel, but that was a bit lower than the $98 level hit in overnight trading.

Volatility (VIX) spiked up to 21% today - this was even higher than on "Egyptian Friday" a few weeks ago. The flight to safety was reflected in gold prices hitting just below $1407 mid-day before pulling back to about $1398. Trading volume jumped 13% on the NYSE and 7% on NASDAQ - not nearly as high as one might expect for a market like today - is this a positive sign? Trading in the S&P 500 stocks jumped up to 4.3 billion shares, above the 50 dma at 3.4B but below the volume traded on "Egyptian Friday".

I closed the Mar RUT 760/770 call spreads today for a small gain; I will now wait for an opportunity to close my put spreads at 690/700. This will effectively reposition my Mar condor on RUT to 875/885 and 730/740. The combined position now stands at a P/L of +$1120, delta = +$13 and theta = +$192. The question on traders' minds now is whether the unrest in the Middle East will trigger further market correction or whether this will be similar to the "Egyptian Friday" a few weeks ago with a pretty rapid recovery??