The markets gapped open higher this morning, but stalled in the afternoon as traders began taking profits. SPX gained $5 to close at $1137 while RUT gained $11, closing at $1142. In spite of the afternoon pullback, traders seemed to relax a bit with the VIX losing almost two points to close at $14.2%. Friday's strong day trading higher, followed by a gap open higher today certainly seems to suggest we have found the bottom of this correction. But the sell off in the afternoon is a bit concerning. The resistance level to watch on SPX is around $1950. A close above $1950 would be the strongest confirmation that the correction was over. But we are in options expiration week, and that can be a very volatile week for both stock prices and the implied volatility of the options.

If we view the small caps as the "canary in the coal mine", then RUT's relative strength for the last several trading sessions is a strong signal for a correction bottom. Both SPX and RUT gapped open higher today, but if we look at the magnitude of the move since Friday's open, RUT is up 2% whereas SPX is lagging behind a bit with a gain of 1.4%.

No economic news of any consequence was issued today. In fact, outside of retail sales reports on Wednesday, it looks like a pretty light week for economic news, at least the economic news more likely to move the market. Friday brings the Empire manufacturing survey, capacity utilization data, industrial production,  PPI and Michigan consumer sentiment data. Those are all important economic indicators, but they rarely move the market.

Maybe this market is most vulnerable to fears emanating out of events in the Ukraine and the Middle East, but that is impossible to predict. Even a solid sideways day tomorrow would be a welcome relief.