The markets traded up strongly this morning, mostly based on Bernanke's testimony before Congress. But when the FOMC minutes were released this afternoon, it included comments that several committee members are ready to reduce the Fed stimulus if economic data show improvement. To my mind, that wasn't news because it was the classic "if" statement and we aren't seeing much in the way of stronger economic data. The news has been full of committee members saying they were ready to reduce quantitative easing if the economic data improved, so today's minutes should not have surprised anyone. Apparently, many fingers were on the sell trigger and the markets sold off strongly in the afternoon on strong volume.

The report of another strong increase in existing home sales to an annualized rate of 4.97 million didn't hurt the morning's bullish sentiment. SPX lost $14 to close at $1655 and RUT sold off even more strongly to $982, down $17. Trading volume spiked upward with 3.0 billion shares of the S&P 500 stocks trading; volume on the NYSE increased 28% and trading on NASDAQ increased 23%. The VIX jumped up to 14.5%, but then pulled back to 13.8%, up about half a point.

Is this the beginning of the long awaited correction or did traders just get spooked and overreact? The SPX candlestick pattern is the classic bearish engulfing pattern, or the outside day in western bar charts. This often signals a trend reversal to the downside. On the other hand, SPX traded down to $1650 and then bounced. Hewlett Packard reported better than expected results after the bell, so that might help support a bounce back tomorrow.

I removed the hedge on my June position; that takes it to a net P/L of -$2,940 with position delta = -$69 and position theta = +$148. Today's market move reduced the delta of the 1030 calls to 14 and the 900 puts remain far OTM with a delta of 9. Our theta/delta ratio is strong. But we'll see what tomorrow brings.