The markets continued their jubilant march upward today with SPX gaining $11 to close at $1703 and RUT trading even stronger, closing at $1084, up $15. Volume dropped off from yesterday with 2.0 billion shares of the S&P 500 trading.  Trading volume on the NYSE dropped 15% and decreased 8% on NASDAQ. The VIX shed another point today, closing at 15.7%.

Apparently, all is well with Washington, the economy and the world. I didn't understand why we traded down as far as we did on trumped up fears of debt default and I don't understand why the market has jumped so strongly upward now that the two sides appear to be only minimally talking to each other. But I have to remind myself that the market is often irrational.

SPX is trading just below resistance at $1710, set by the high in early August. Support stands at the 50 dma at $1678. The candlestick on October 9 is not too far off of a classic doji, but with an elongated lower shadow, setting up a classic reversal. The candlestick purists wouldn't call this a doji or a hammer, but it did at least suggest a reversal.

But no one would have predicted this strong turnaround. From the intraday high on September 19th through the intraday low on October 9th, SPX dropped $84, but SPX has now recovered $57 or 68% of that drop in three days. Wow! It is also worth noting that the bullish trend of higher highs and higher lows remains alive and well. The low in late September was at $1630 and the closing low on Tuesday was $26 higher.

My first blush analysis of the RUT price chart is simply that it has behaved more bullishly all along, trading down less and now trading upward even more strongly. RUT's close today at $1084 is very close to its all time high at $1088 on October 1st. So the charts are clearly bullish, but be careful about taking any bullish positions; protect the downside. The bulls are in charge, but this remains a very volatile market.

Enjoy the weekend.