Since the markets have pushed back into record territory at the very end of September, market volatility has dropped dramatically. For the last eight or so trading sessions, the S&P 500 has often been in a narrow 10-point trading range.
These flattish/slightly up days may not be exciting, but they are great news for the bulls. Think about it: When was the last time we were down one percent? Way back on October 13. If this is what passes for consolidation, this is pretty good.
This "green light for risk" comes with a number of caveats:
First: Traders seem willing to ignore weakness in Europe as long as ECB head Mario Draghi is strong--specifically, that Draghi will not be thwarted by Germans or others who do not want him to expand the stimulus program.
In other words, belief in the "Draghi put" is very much alive. If Draghi's influence is curtailed, markets in Europe and the U.S. are likely to react negatively.