This morning's market looked weak, but didn't appear like anything serious was happening. However, it was as though the market sprung a slow, but steady leak that just continued to pull it lower all day. Before we knew it, we were looking at serious losses. SPX lost 1% or $30 to close down at $2061, and RUT even took it on the chin more strongly, closing down at $1234, down $30, but this was a 2.4% drop on RUT. The NASDAQ composite traded more like RUT, losing 2.4% or $118 to close at $4877. All of the major market indexes have been trading weakly for the past three days, but today was a significant shift. As one might expect on a day like this, trading volume spiked up with 2.3 billion shares of the S&P 500 companies trading. Trading volume rose 9% on the NYSE and increased 37% on NASDAQ.  Volatility popped up with the VIX increasing almost two points to 15.4%.

The only economic data reported today was durable goods orders for February, which were down 1.4%, a turnaround from the 2.0% gain in January. The market's extreme reaction to this data point reinforces what I have been saying for some time. The unprecedented quantitative easing and extremely low interest rates for a prolonged period of time have created a unique market environment. Wall street veterans have nothing in their past market experience to draw upon; this is new for veterans and newbies alike. No one feels like they know how this will play out. We haven't been here before. Consequently, we have a nervous market that sells to protect profits first and asks questions later. I think this is largely the cause for the V-bottoms and price volatility we have been experiencing for the past couple of years.

My April iron condor on RUT at 1110/1120 and 1310/1320 stands at a net gain of 11% if closed today, and the May position that we just opened last week is already up 4%. I have been nervous about the downside lately and have allowed myself more safety margin when selling the put spreads. On days like today, that feels good.

I close with the two questions on all traders' minds:

1) Where will this correction bottom?

2) Will the bulls buy this dip strongly just as they have for the past two years and create one more V-bottom?