Several pieces of disappointing economic news and continued conflicts in Libya and Saudi Arabia combined to torpedo the markets today. The SPX dropped almost immediately after the open to the long-term support level around $1300 and traded sideways along there most of the day. SPX closed at $1295, down $25 for the day. RUT lost $22 to close at $800. Trading volume spiked up with 3.7 billion shares of the S&P 500 stocks changing hands; this is above the 50 dma at 3.5B. Trading on the NYSE was up 28% and was up 19% on NASDAQ. The next support level on SPX is at $1275, set on January 28, "Egyptian Friday". If we break through $1275, the next strong support level is down at $1227, the top set last November. From a charting perspective, RUT could easily fall to the area of $770 to $780 if it can't hold $800.

Crude oil dropped to just above $100 earlier today but closed near $103 based on some news from Saudi Arabia of clashes of protesters and police. China surprised everyone by posting a trade deficit, fueled by higher oil prices (imports) and weaker demand for exports. Moody's downgraded Spain's debt. And if that wasn't enough bad news, initial unemployment claims increased to 397k from last week's 371k, while continuing unemployment claims dropped by 20 thousand. So today's market weakness isn't too surprising and many market indicators have been suggesting a correction. We are now 3.6% off of the SPX high of $1343 in mid-February. A typical correction of 9% would take us to $1222, near that support level set in November - that would hurt. Or can we continue to churn sideways as we have for the past three weeks or so? It has been a volatile ride but SPX has stayed in the range of $1340 to $1295. If we open downward tomorrow, that would not be a good sign.

Today's increase in volatility pulled down the profitability of both of my condors (condors are negative vega positions). My Mar condor stands at a P/L of +$3,000 with delta = +$43 and theta = +$235. Surprisingly, both spreads in this position are now over two standard deviations OTM as we approach the last week of the trade - very unusual. The Apr position stands at a P/L of -$500 with delta = +$18 and theta = +$92.

So now we watch to see which way this market moves tomorrow: new lows or back into the consolidation range?