Even as the offices begin to thin out for the holidays, the markets hit new 2010 highs today. SPX climbed $8 to close at a new high for the year of $1255. In fact, this level has not been seen on SPX since September of 2008. RUT gained $8 to close at $791, also a new 2010 high. RUT has traded much stronger than the blue chips this year and the current price level matches prices of December 2007. Volume continues to drop off with 2.8 billion shares of the S&P 500 stocks trading; this is about one billion shares below the 50 dma. Trading on the NYSE dropped 5% and trading on NASDAQ dropped 2%. Today was a slow day for economic data. Several positive earnings reports buoyed the market sufficiently for traders to overlook concerns about credit downgrades of the sovereign debt of Portugal and Greece. It appears traders vacillate between two states of mind: 1) The US is part of a global economic system and European sovereign debt does affect us, and the 2) The US economy is recovering and remains one of the strongest economic engines in the world - just look at those earnings reports.

Many technical indicators have been flashing overbought for some time but the market keeps grinding out steady gains. The gains this week have surprised me; I expected the markets to largely trade sideways as the holidays get into full swing and the offices empty. My Jan SPX condor remains underwater with delta = -$85 and theta = +$106; the delta of the 1300 calls = 16. I keep expecting this market to slow its steady upward climb, but it keeps on chugging along.  But we just trade what the market gives us, not what we expect.