The S&P 500 gave up $23 yesterday, closing at $1727. Today, SPX rose $23 to close at $1771.  RUT behaved similarly, closing up $21 at $1100. SPX essentially made a rather large round trip in just two days - wow! What does that tell us? The trading gods are toying with us.

Yesterday we had an excellent GDP report with annualized growth in the third quarter of 2.8%. And the market traded down. The standard explanation was either 1) the correction we have expected has begun, or 2) this means the Fed will begin to reduce their stimulus programs. This morning we were surprised by a good jobs report of 204 thousand new jobs. Unemployment ticked up a bit to 7.3%, and most of the new jobs were minimum wage jobs, but it was still refreshingly good. And the markets regained everything that was lost yesterday! So good news was bad news yesterday, but good news was treated as great news today. I can't explain it. I think it merely reinforces what we have been subjected to all year. The markets have repeatedly traded scared and then reversed on a dime. Very few fund managers have reported consistently good results this year. It has been a maddening market. I think it is a combination of traders trying to predict the effects of the Fed supporting the market and the increasing amount of automated trading that swings huge volumes back and forth in very short periods of time.

Trading volume dropped back a bit from yesterday with 2.4 billion shares of the S&P 500 trading. Trading on the NYSE declined 8% while trading volume on NASDAQ dropped 13%. Volatility decreased by a full percentage point with the VIX coming in at 12.9%.

I think yesterday's price action, at a minimum, serves as a warning about this market. Traders are nervous and the rush for the exits can easily be triggered by rather benign events.

I closed my Nov SPX 1800/1810 call spreads today. This locks in a 6.4% loss for November, assuming the 1650/1660 put spreads expire worthless. But my December positions are already up about 3%.

This was certainly an interesting week in the markets. Relax and enjoy your weekend.