Fears about China appeared to take a back seat and the markets traded back rather strongly with SPX gaining $48 to close at $1969. RUT gained $26 to close at $1162. And volatility pulled back quite a bit with the VIX closing at 24.8%, down three points today. Trading volume was slightly higher with 2.3 billion shares of the S&P 500 stocks trading, but this remains slightly below the 50 dma at 2.4B. Trading volume rose 5% on the NYSE and rose 10% on NASDAQ.

SPX opened higher this morning, in line with higher European markets today, and then basically traded sideways until about 1:30 pm ET, when SPX began to trade higher, closing the session at $1969, nearly its high for the day ($1970). That was pretty bullish chart action, but was missing the strong trading volume one would like to see confirm that bullish trading. SPX closed twenty dollars shy of its recent high after the crash, but RUT's close was within one dollar of its post-crash high.

I jumped back into the market after the crash and split my October put spreads on RUT between 950/960 and 1040/1050. Both spreads are now profitable. The lower spread is quite safe, but the 1040/1050 spread could require hedging if the market tests support again. A series of re-tests of support after a strong correction is common historically. But last October's correction was followed by a straight-up recovery. V-bottoms seem to be the new normal. But the jury is still out on this correction.