The markets opened this morning and decided to test us with SPX breaking support at $1980 in the first hour of trading. But then the "buy the dip" crowd took over and away it went. SPX closed up $16 at $1998 and even RUT was up with a close at $1129, gaining $10. Volatility dropped off by more than it spiked up yesterday with VIX closing at 13.5%, down 1.4 points today. Trading volume was pretty flat with two billion shares of the S&P 500 trading today. Trading rose 6% on the NYSE and dropped 4% on NASDAQ.

So what are we to think about this market? Is the bull still alive or not? There are certainly many signs of slowing; many measures of value and sentiment seem to be nearing extremes. The percentage of NYSE stocks that are above their 200 dma dropped to 53% today. This is a lower percentage than either the August or the February corrections. SPX is being carried higher by a decreasing number of stocks - this is what analysts are talking about who mutter about weak market internals.

New home sales reported at an annualized rate of 504k for August, up from 427k in July. Tomorrow brings the weekly unemployment claims.

Be careful out there.