I am in Phoenix and will be traveling back to Chicago later today, so I am posting my blog early, before the market closes. I was invited to speak for the POINT options trading group here in Phoenix last evening. For any of you who live in this area, I recommend you check out this group - a very knowledgeable and supportive group of options traders. If I lived down here, I would be part of this group.

With a little over two hours until the market closes, SPX is trading at $1555, up $2 and RUT is trading at $943, up $3. Trading volume remained relatively low yesterday with about 2.3 billion shares of the S&P 500 stocks trading. In fact, trading volume in the S&P 500 has only touched the 50 day moving average once in the last ten trading sessions. And the preliminary indications suggest another low volume trading day today. Perhaps I am not the only trader that remains a bit apprehensive of this market, in spite of a continuing push higher. The markets traded lower this morning, but then recovered to begin making gains by late morning, but the trading volume remains low.

If you take a look at the SPX chart, you have to be impressed with those lower shadows on the candlesticks the past few days. SPX has started out weaker the last three mornings and dipped down to around $1548 before recovering, but that level is holding so far. This shows the underlying bullish strength of this market, while the sideways trading at low volume is characteristic of the market's weariness after such a strong rally upward. Markets always take pauses on their climbs higher; sometimes those pauses take the form of a strong correction; sometimes the market just trades sideways for a period of time - the so-called "consolidation" phase.

Retail sales came out with a gain of 1.1% for February, surprising analysts with this strong showing - but the markets opened weakly on the backs of that data. I don't recall a market environment quite like this. The strong gains we have seen recently would normally be causing euphoric excess - the classic "betting the farm" syndrome. But traders recognize the Fed's supporting role in this rally and seem to be nervous that the punch bowl will be taken away and spoil the party. The market's reaction to the Italian elections a couple of weeks ago demonstrates the nervousness of this market. Be careful.