Analysts and market gurus have been predicting a correction for most of this year. And since the market reversed on a dime and recovered all of the 6% correction in June, they have resumed their message: a correction will be good for the market. Well, today they received at least a start on their healthy market elixir. SPX lost $24 to close at $1661 while RUT closed at $1028, down $20. Volatility popped up almost two points, with VIX closing at 14.7%. Although I was a bit surprised VIX didn't spike higher on today's market move.

Many observers thought the market was reacting to the weak Philadelphia Fed and Empire Manufacturing numbers, but the futures were down over ten points before those reports were released. The Philadelphia Fed survey for August came in at 9.3, down markedly from July's 19.8. The Empire Manufacturing survey dropped a bit to 8.6 from last month's 9.5. Industrial production and capacity utilization data were both flat for the month. The CPI came in at +0.2%; is it starting to inch up? Initial unemployment claims dropped to 320k, down 15k, while continuing claims dropped 54k. All in all, the data didn't seem too bad. After all, you would think we would be getting accustomed to poor economic data. I'm not sure what started this down draft, but traders were anxious to protect their gains once it started. Today also didn't fit the "good news is bad news" theory of predicting whether the Fed will start to taper stimulus. On that basis, one would have thought today's weak data would have rallied the market.

SPX sliced through support at $1680 and $1670, and appeared to find support at the 50 dma ($1657), hitting a low of $1659 today. The mid-June peak at $1052 may be a support level to watch if the 50 dma is breached. RUT is in "no man's land" on its price chart. RUT gapped down at the open and broke support at $1040. The 50 dma is at $1018 and solid support can be found at $1000.

This pullback essentially guaranteed that my Aug spreads on RUT at 970/980 and 1080/1090 will expire worthless this weekend. My Sept position at 930/940 and 1120/1130 stands at a gain of 8% with position delta = +$27 and position theta = +$60.

Will this really get ugly or is this just a minor pull back as the market awaits the September FOMC meeting?