This market has no in between anymore. It's either extreme pessimism or extreme happiness - consistent with the 'risk on', 'risk off' HFT + EFT environment that has now become the trademark of the equity market over the past 3-4 years. Three weeks to the day the market was in shambles, with technicals about to break down past the key 1120 level. The following day at 3 PM we put on a 4% rally in the closing hour and it's been almost a non stop party since. It's been one of the most powerful moves in terms of amount of move in short duration that I've seen outside of early 2009 and periods of 1999.
I don't mean to step on anyone's party but we are nearing some overbought levels now in a bevy of secondary indicators. There is some resistance ahead as well in the 1260-1265 level (June lows) but resistance is all relative as we've seen many times the past few years. That said, with the market clearing the 200 day moving average (exponential) Friday, traders will be in a buy the dip mentality until a point comes when that level is again broken. So as long as this S&P 500 holds the upper 1230s, I would not expect any rash pullbacks as buyers who missed this ferocious move now will be trying to jump in as performance anxiety hits.
I did not post it, but Friday Jon Hilsenrath (he whom the the Fed speaks through) of the WSJ posted a story about more mortgage buying from the Fed.... like I've insisted for well over a year, QE3 is coming. My timing is going to be off perhaps due to Operation Twist ... but this is all they know to do, and targeting asset prices (i.e. manipulation) is now the Fed's unspoken third mandate.