The headline news has traders in a pessimistic mood, moving assets to cash. The SPX lost $25 today to close at $1257 while RUT closed down $9 at $782. Trading volume jumped up again today from high levels yesterday. 4.7B shares of the S&P 500 stocks traded today. Trading volume was up 11% on the NYSE and up 10% on NASDAQ. SPX bounced off support at $1260 yesterday and traded higher, but today it closed below that key support level. If it cannot hold $1260 tomorrow, we could see some real damage. The next support level is just below $1230, the peak set in November. SPX is now down 6% from the peak in February; a drop to $1230 would make it an 8% drop. Most corrections have historically averaged around 7-9%.

Economic data didn't create any confidence for traders to offset all of the bad news from Japan, the Middle East and Libya. Housing starts for February came in at 479k, down from last month's 6187k. Building permits were also down at 517k from last month's 563k. In addition, PPI spiked up with a 1.6% increase, fueled by energy and food price increases.The only less-than-bad news was oil prices remaining around $99/bbl.

My March iron condor continues to make its way to expiration with a P/L of +$3,660, delta = +$42 and theta = +$617. The 740 puts remain over three standard deviations OTM; unless the market tanks further tomorrow, I will allow all of the March spreads to expire worthless for the max gain of 24%. The Apr condor on RUT stands at a P/L of -$160 with delta = +$50 and theta = +$46. The delta of the Apr 710 put closed at 17.6 and is right at one standard deviation OTM.

So my iron condor positions are weathering the storm well, but most of my AAPL trades are underwater. The exception is my AAPL LEAPS that I have been selling calls against; those LEAPS remain profitable even after today's big drop. So now we watch to see if the indexes continue to drop or if traders realize that the US economy isn't that bad.