Market Wrap: S&P 500 Experiences Outside Day

As the chart above shows, the S&P 500 (SPX) put in an outside reversal today to the downside. This happens when the market rallies above the previous day's high, but then reverses and closes below the previous day's low (and vice verse).

This pattern bears close watch, as it often has bearish implications for the overall market. And today it was accompanied by rising volume. On the chart you can see that volume had generally been declining since it peaked on 5/7. But today volume levels rose on both the NYSE and Nasdaq.

This makes me think that the market isn't ready to overtake its recent high at SPX 930 just yet. The downside today was led by the banks and financials, while energy and materials bucked the general weakness.

Trading comment: Despite the bearish price action today, I am not ready to get aggressive with short positions. I put on a small inverse financials etf (SKF) position late in the day, but just for a trade. The market has continued to act resilient on the downside, and despite some brief consolidations, the market has continued to stair-step higher.

Some other trade updates include a couple of trading longs in CHKP and CLR. I also added to our URBN positions yesterday. And today I took final profits on our MOS position, which has had a big run and looks due for a deeper pullback.

Note: I try to update my trading activity on this blog, but if you would like quicker updates on trades I am making, try checking out www.twitter.com/lagenghis

long CHKP, CLR, URBN, SKF