Maybe traders woke up today and realized Bernanke may not pull the trigger on QE III this week? Or maybe they just think the market was getting a little ahead of itself before we have a definitive announcement. The FOMC meets tomorrow and Wednesday with the statement issued Wednesday afternoon. SPX dropped $1 to close at $1385 and RUT lost $4 to close at $792. But trading volume fell off dramatically with 2.3 billion shares of the S&P 500 stocks trading (the 50 dma is 2.7B). Trading on the NYSE and NASDAQ both dropped 29% (curious coincidence). I think this indicates a fair amount of uncertainty before the FOMC announcement. In spite of minimal market movement, the VIX moved up 1.3 points to close at 18%.

We did not have any significant economic data or reports issued today, but the balance of the week is loaded: Tuesday has the Chicago PMI, consumer confidence, and Case Schiller; Wednesday brings the ISM Index, ADP employment data and the FOMC announcement; Thursday has the weekly unemployment claims data and Friday has the granddaddy of economic reports: the U.S. Nonfarm Payrolls Report. So seeing a slow day in the market today and probably also tomorrow makes sense in light of some of the market-moving data due later in the week.

My Aug iron condor on RUT stands at a P/L of +$2,360 with position delta = -$30 and position theta = +$29. With 17 days to go, our 650/660 put spreads are far OTM and the 850/860 call spreads are about one and a half standard deviations OTM. Absent a major market move, this position will likely expire worthless. But time will tell. Large market moves have become common the past couple of years.