The markets pulled back a bit today, causing many bears to wonder if finally their predictions are coming true. But I'm not so sure. SPX closed down $8 at $1746 and RUT closed at $1111 for a loss of $5 on the day. SPX hit its low around 11am ET this morning at $1741 and then recovered to the close at $1746. RUT's candlestick is the classic hanging man which often signals weakness at the top of a trend. Coming after yesterday's doji, this is one more sign of the trend weakening. However, look at the VIX, closing at 13.4%, up just one tenth of a percentage point. That tells me that market participants are not concerned about this move, so I wouldn't put on the bear suit just yet. This bullish trend has been proceeding nonstop for almost a year now, so it is tempting to start imagining the end around the corner. Plus, it is hard to see any really good economic news to build one's confidence. The best I can do is remind myself that the Fed is holding this market up and I should therefore be bullish. That seems to be the working hypothesis to date, with emphasis on "working". Whether it feels good or not, it is working. The corrections have been frequent and volatile, but the bullish trend is intact.

An additional piece of data supporting the slowing market case is the flat to declining trading volume today, with 2.5 billion shares of the S&P 500 stocks trading. Trading on the NYSE dropped 4%, but trading on NASDAQ increased 2%. But I would also point out that today's market declines were modest and yet volume remained low. Therefore, it wasn't a case of traders heading for the exits.

Unemployment claims are out tomorrow and Friday brings consumer sentiment and durable goods orders. It will be interesting to see how the market handles those reports. Will bad news continue to be seen as good news, i.e., meaning the Fed will continue filling the punch bowl?