This market has been seeking direction for several weeks, but today it appeared the bulls were firmly in charge. But time will tell. SPX tacked on $18 to close at $1897, a new all-time closing high. RUT also traded strongly, up $26 to close at $1134. Both indexes gapped open this morning, a very bullish sign. But trading volume was down today with 1.8 billion shares of the S&P 500 stocks trading (the 50 dma is 2.2B). Trading declined 5% on the NYSE and decreased 6% on NASDAQ. Volatility continued its slow decline, with the VIX closing at 12.2%, down seven tenths of a point.

The price action on all of the major indexes was very bullish, but the lack of confirming volume is a concern. On the other hand, the declining VIX tells us that traders are not concerned about an imminent correction. These levels of the VIX are back to where we were in late December and early January.

We have watched the RUT and NASDAQ composite trade much weaker than SPX for several weeks, but that trend shifted today. RUT gained 2.3% today from Friday's close; NASDAQ gapped open this morning and gained 1.8% from Friday's close, but SPX only gained 1.0%. This is at least one data point suggesting the rotation from small caps and high tech to the blue chips may be nearing its end. The alternative explanation for recent market behavior was to suggest the small caps were leading the market into a severe correction. One data point doesn't make a trend, but today's market action is at least hopeful.

My iron condor positions are faring well. The May position on RUT stands at a net gain of 12% with delta = +$6 and theta = +$256 on 20 contracts. With just a few days to go, this position is delta neutral with both spreads over two standard deviations OTM. The RUT Jun iron condor stands at a net gain of 14% with delta = +$10 and theta = +$87 on 20 contracts. The position theta is much smaller because we still have 38 days to go until expiration. Time decay isn't ramping up too much as yet.

Watch for the bears to try to regain control in the morning.