Market rallied hard in face of bad news!

Sales of new homes had their second-worst month on record in August. The Commerce Department says new homes sales were down by 29% from the same month a year earlier. It revised up from 276,000 to 288,000 signaling that the housing market remains a severe weak spot for the economy. It was 7k units below expectations at 288k annualized but the prior month was revised up by 12k to 288k. The level is just a touch off the May level of 282k which was the lowest since at least 1963. The absolute number of homes for sale fell by 3k to 206k, the lowest since 1968.
source:Yahoo Finance

The cost to insure Ireland’s debt climbed to a record, leading a surge in European sovereign credit-default swaps, on concern Anglo Irish Bank Corp. won’t pay back bondholders in full. Contracts on Ireland jumped 23 basis points to 487 basis points at 12:50 p.m. in London, according to data provider CMA. Swaps on subordinated debt of Anglo Irish, which was nationalized last year, now cost 5 million euros ($6.7 million) in advance and 500,000 euros annually to insure 10 million euros of debt for five years.
source:Bloomberg

The Commerce Department said durable goods orders dropped 1.3% after a revised 0.7% increase in July. Markets had expected orders to fall 1.0% from a previously reported 0.4% gain. The decline last month reflected a 40.2% plunge in non-defense aircraft orders after a 69.1% surge in July.
If you are scratching your head and asking yourself this is not good news why markets shoot up? You are not alone. That's why we call stock market casino, it's a different species, it does not care what economics data says on the short run. The only explanation could be weekly option expiration, there is a good chance that big institutions sold lots of weekly put options therefore they bought futures overnight to cause a short squeeze in opening to protect their positions. For those who are not familiar with derivatives I need to explain when an option contract does not hit the strike price by expiration day it become worthless and option seller collect 100% premium.
I would not base by trade on one day action therefore I would not make any changes in my positions. Please note if S&P500 stays above 1131 by Tuesday you have no business to be bearish.