The markets opened lower this morning but then continued their strong bounce back higher with SPX gaining $11 to close at $1830 and RUT closing at $1148, up $15. Volatility was essentially flat with the VIX coming in at 14.1%, down two tenths of a percentage point. Trading volume was mixed today as the market spurted higher. Trading volume dropped 1% on the NYSE and increased 11% on NASDAQ. As of 5:30 pm ET, the S&P 500 volume data was not available.

If you are looking for economic data to account for this bullishness, you will search in vain. Initial unemployment claims rose eight thousand to 339 thousand, but continuing unemployment claims dropped off by eighteen thousand. Retail sales for January declined 0.4%, even greater than the 0.1% decline in December - since we aren't allowed to mention Christmas any more, maybe everyone stopped buying gifts.

SPX is now about $20 from its all time high and RUT solidly broke out above its 50 dma at $1139. GOOG, NFLX, PCLN, TSLA, and FB all achieved all time highs today. Of these stocks, I think TSLA and FB are the most significant because their fundamentals just don't support these price levels. But that is one of the characteristics of a strong bull market - it doesn't have to make sense; just buy; it's going higher.

Needless to say, this market bounce worries me. SPX corrected 6.1% at its intraday low on February 5th, but that was only on Wednesday of last week and SPX has gained $92 from that low. Could we be setting up the classic head and shoulders reversal pattern? On the other hand, we repeated this same pattern several times last year, with a pull back of 4-5% and then a quick reversal back to make a new high. But I remain cautious. Maybe this time is different?