The markets opened up pretty strongly this morning, but soon lost their momentum and started selling off. However, the Russell 2000 Index (RUT) stood out from the pack today and just continued to sell off all afternoon. It was the only major index to post a loss for the day. RUT closed down $9 to close at $590, matching the intraday low set last Thursday. SPX traded up and tested resistance at $1042 before retreating to close at $1028, a gain of $5. The price action of RUT and SPX over the past three sessions appears to be establishing a bottom for the correction. The volatility index (VIX) ran up earlier in the day but ended the day essentially unchanged at 30%. The ISM Services Index reported out at 53.8, down from last month's 55.4; economists expected a drop, but not quite that much. That report, at 10 am ET, appeared to start the slow sell off in the markets. Trading volume was mixed; it was 18% higher on the NYSE and 29% higher on NASDAQ, but the S&P 500 stocks only traded 4 billion shares, well below the 50 day moving average.

The strong market action this morning prompted me to remove the Sept put hedges on my Aug RUT condor and I re-established half of my put spread position down at 510/520. As it turned out, it would have been nice to have had those Sept puts in place, but I didn't see the sell-off coming. My condor's position delta and theta are now similar at +$58 and +$41, respectively. When the delta and theta of your position are similar, you are in a weak position and either a market move or an adjustment is imminent. So I will be watching to see if RUT breaks through support at $590 and SPX breaks through support at $1010. If those support levels are broken, we may be seeing the beginning of a bear market trend rather than a bull correction.