Bernanke surprised the markets today by announcing that economic conditions do not yet justify beginning a reduction of the Fed's stimulus programs. This announcement certainly was a surprise to most market analysts, but Bernanke's message has been remarkably consistent - the market just didn't listen. Bernanke laid out the conditions for beginning tapering back in June, viz., an improvement in the unemployment rate to 6.5% or lower. Ironically, the market threw a tantrum at the mention of tapering at that time, but now is surprised by Bernanke following his own stated guidelines. Perhaps this was a classic example of crowd psychology.

Markets spurted higher on the FOMC announcement, and one could argue that was a predictable response to the idea of continued stimulus. But perhaps a large amount of today's rally was short covering because so many traders expected the announcement of tapering and were expecting the market to drop at least somewhat in response.

SPX gained $21 to close at a new all-time high of $1726. RUT also set a new all-time high at $1077 with an $11 gain. Volatility pulled back a bit with the VIX paring off nearly a full percentage point to 13.7%. Trading volume spurted higher with 2.4 billion shares of the S&P 500 stocks trading. Trading on the NYSE increased 42% while trading volume increased 21% on NASDAQ.

A couple of economic reports this morning were over-shadowed by the FOMC. Housing starts in August rose by eight thousand to 891k. But building permits dropped from 954k to 918k in August.

Today's surprising rally didn't change the position for my September iron condor at 940/950 and 1120/1130. Both spreads are over two standard deviations OTM, so I will allow these spreads to enter expiration this weekend and expire worthless for the maximum gain of 15.2%. This brings the year to date results for the Flying With The Condor™ service to +7.9%.

So what should we expect tomorrow - a continued rally or some profit taking?