The mood on Wall Street darkened further as traders considered the Fed's announcement in more detail. Several months ago I was surprised by the Fed's willingness to promise low interest rates for a specific period of time. At that time, I wondered: what if inflation rears its head during that time period? Now Bernanke has tied that promise of lower rates to unemployment below 6.5%. The more I think about the Fed's posture, the more I worry. I preferred the days when the FOMC was basically a "black box" that just issued interest rate announcements periodically.

Of course, the news reports from D.C. are not helping the mood on the street. Now I'm beginning to see articles about why going over the cliff is either 1) no big deal, or 2) will be painful, but good for us. I actually think there is some truth in the latter position; perhaps the fiscal cliff does what no politician has the courage to tackle. The fact that we are seeing those articles shows how we are collectively beginning to think that no agreement will be reached. There is probably a betting line in Vegas; I wonder what the odds are of an agreement?

SPX lost $9 to close at $1419, right at the support level set by the April highs. RUT dropped $5 to close at $824. Trading volume backed off with 2.4 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE declined 3%, but increased 6% on NASDAQ. Volatility rose almost a point with VIX ending the day at 16.6%.

My Dec condor now stands at a net loss of 9% with delta = -$75 and theta = +$234. RUT's pull back and this position's large theta are whittling down this position's loss to something more reasonable.