When the market has been running up for a while, it is often good news rather than bad news that triggers profit taking. That was the case today as early excitement over the death of Osama bin Laden triggered slow but steady selling pressure all day. We even managed to close near the lows for the first time in a couple weeks.
The point loss was quite mild, but breadth eroded steadily as the great bulk of charts hit their highs at the open. We had weak action in chips and banks while retail and pharmaceuticals attracted some buyers.
Volume slowed, so it was not a technical distribution day, and overall the big picture remains positive. We were just too extended after a straight-up run and once the good news was sold at the open, it slowly spread. It is possible that the market is making a top, but there isn't any clear and convincing evidence of that right now. We could very easily see some more downside in the near term as we consolidate further, but it is what we need to do if this uptrend is to continue, according to the technicians.