Weak economic news from China triggered declines in Asian markets and resulted in weak openings in U.S. and European stock markets. But that weakness just never stabilized. SPX fell $36 to close at $1552 and RUT was even weaker with a close at $907, also down $36. Trading volume spiked upward with 3.2 billion shares of the S&P 500 stocks trading today. Trading volume rose 43% on the NYSE and increased 22% on NASDAQ. As one might expect, VIX popped up 5 points today to 17.3%.

SPX and RUT were trading in a tight sideways range through most of March, so it is interesting to contrast the two indexes in today's decline. SPX traded from about $1548 to $1570 before breaking out higher last Wednesday. Today's decline was severe, but the close at $1552 just took SPX back to the lower end of that March trading range. But RUT's chart is strikingly different. Last Wednesday's big day merely returned RUT to the middle of the March trading range because the weakness in early April had driven RUT much lower than SPX in a relative sense. And today's move took RUT down close to the next major support level at $895. The concern raised by this analysis is that the small caps normally lead markets both up and down, so, in this case, RUT's exaggerated weakness relative to SPX may portend further correction.

The Empire manufacturing survey came in much lower than analysts expected with a reading of 3.1 for April, down from the previous month's 9.2. While positive readings on this index are good news, the unexpectedly large drop was a concern for traders. The NAHB housing market index  weakened a bit in April, dropping two points to 42.

As one might expect on a day like this, my May condor position pulled back quite a bit on this drop in price and the increase in volatility. It now stands at a P/L of -$600 or -3% with position delta = +$63 and position theta = +$77.

Now the question on everyone's mind: is this the beginning of a severe correction, or just a momentary pullback? After all, the bull camp's arguments of increasing corporate earnings and Fed intervention are still valid. That question just demonstrates why predicting the market's next move is so difficult.