Ugly Reversal Day

The market was unable to hold on to its early gains, and selling intensified as the day wore on.

That made for a negative outside reversal day in the major indexes. Additionally, volume levels rose on the session, which also made it a distribution day.

The SPX fell -0.9%, while the COMP and RUT fell -1.6%. The semis (SOXX) got hit hardest, falling -3.7% and making a new low for the year.

The media will blame today's decline on the rising inventory of unsold homes that came out in today's report. But weakness in the housing sector is not really a new data point, just a convenient scapegoat for today's negative price action.

The outside reversals in the COMP and SPX are short-term negatives because they signal that the recent tightening consolidation we were seeing has most likely been resolved to the downside. Only another quick reversal offsetting today's weakness would change this trend.

Last, I think today's price action lessens the risk going into the FOMC meeting. Had the market continued to runup ahead of the meeting, I would have been more worried about a negative reaction.
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