Markets closed much higher today, but the closes looked better than the intraday trading which was extremely volatile. Toward the end of the day many observers feared we were going to surrender much of today's gains. SPX opened higher this morning and continued to climb until around 1 pm ET, when SPX hit its high for the day at $1990, but then traded off by over forty points until just after 3 pm ET, and then traded strongly higher into the close at $1988, up $47 on the day. RUT behaved similarly, gaining $21 to close at $1154. After peaking around 53% on Monday, the VIX has now dropped to 25.7%, down almost five points just today. That level of volatility remains high, but it has come down significantly over the past couple of days.

Trading volume declined from yesterday with 3.2 billion shares of the S&P 500 trading, but this is still well above the 50 dma at 2.4B. Trading dropped 3% on the NYSE and declined 10% on NASDAQ.

The big economic news today was the second estimate of second quarter GDP, revised higher to +3.7%. This helped reassure investors that the recent market weakness was over-done. Pending home sales increased 0.5% for July, up from the -1.7% of June. Initial unemployment claims came in at 271k, down slightly from last week's 277k. Continuing unemployment claims increased by 13 thousand to 2.27 million.

The last two days of trading have been very strong, so much so that many analysts are skeptical that this correction is over. Today's last hour of trading certainly appeared to suggest that the bulls are back in charge. But it still pays to be cautious. Dip your toe in carefully.