Traders appeared to be assuming that the Fed isn't likely to change its accommodative posture later this week as they traded the market higher this morning. But the Financial Times reported around 2pm ET that Bernanke will announce that the Fed will begin to taper their QE soon. The selling quickly took the S&P 500 index down $15, but then it recovered somewhat into the close at $1639, up $12 on the day. RUT gained $6 to close at $988. The VIX rose about a third of a point to close at 16.8%.

The bulls were encouraged by two economic data reports this morning; the Empire manufacturing survey came in for June at 7.8, up from a negative 1.4. The NAHB housing market index reported at 52 for June, up from 44. It is telling that an opinion expressed in a publication seems to carry as much weight as economic facts in this market environment. Wednesday afternoon could be a real roller coaster ride.

My June iron condor position on RUT stands at a net gain of $735 or +4% with position delta on 20 contracts at -$19 and theta = +$156. The call spreads are over two standard deviations OTM, so I will allow both the call and put spreads to expire worthless this weekend. The July position stands at a net P/L of +$1,100 (+6.5%) with delta = -$14 and theta = +$106.

Be careful this week; this market is touchy.