The strength seen after the ubber uncertainty Papandreou created is very real. The March 2009 rally is still on.
Even with a bomb-shell of uncertainty, the market held. The market now realizes a credit event is off the table, whether that means the current EU plan or a Plan B or a complete nationalization of the EU banks, the market is started to ignore the macro and focus on the micro. Any weakness via Italy, another US debt downgrade or some other headline, is an opportunity. (I do not know if we will be seeing spikes downward anymore. The VIX looks like it wants to collapse, and the market should see much more stability.)
Now, at the risk of being a Pollyanna, here are some numbers. With q3 earnings pretty much behind us, trailing eps should be around 88-90. A trailing multiple of 14 produces a market range of 1232-1260. The market is just about where it should be for a compressed multiple with decent economic data (and the data has been decent). Looking forward, the SP500 eps will be around 95. A target market price with a trailing multiple of 14 is 1330.
The market should be chilling around current levels, maybe even trend slightly upward, then rally toward 1330 the closer we get to Q4 ending. (Albeit, better economic data gets us to 1330 or higher sooner.)