The bulls were clearly in charge today, with the S&P 500 Index gaining $37 to close at $1941.28. To make it even more positive, SPX opened $5 higher this morning at $1909 from yesterday's close at $1904. We call this a gap up, and it is generally regarded as very bullish. Trading volume was also higher today with 2.5 billion shares of the S&P 500 stocks trading. Trading volume rose 14% on the NYSE, but was only up a modest 2% on NASDAQ. Unlike recent months, RUT has also jumped on this bull's bandwagon, gaining $18 to close at $1113. Volatility contracted again today with the VIX losing two and a half points to close at 16.1%. So all signs are indicating a return to the bull market trend. What a turnaround from last Wednesday!

Today was another light day for economic data. Existing home sales came in at an annualized rate of 5.17 million for September, up from last month's 5.05M. The Consumer Price Index (CPI) reports tomorrow, but that normally isn't a market moving event.

As I wrote yesterday, traders expect prices to retest a support level after bouncing, so I have been concerned that the markets might take another plunge before resuming the bullish trend. The markets have simply headed straight up since last Wednesday - a remarkable run. Maybe we have seen the end of this correction. However, I remain on alert. I still smell the singed hair from last week. My hedges worked, but that was still scary.