Just when it started to feel like we might never pull back again, we managed a weak finish. The S&P 500 topped out almost perfectly at the 1220 resistance level, where the computer programs shut down and we fell fast into the closing bell.
Ironically, volume finally picked up and we had a technical accumulation day. But we are very extended and resistance finally seems to matter. Breadth was solid again, around 4:1 positive, but that isn't a big surprise since stocks have been trading in highly correlated fashion for a while.
I'm sure there are plenty of bears and underinvested bulls breathing a sigh of relief to finally see a little late selling, but you have to wonder if we are going to see much downside momentum. Straight up moves like those we have had over the past week create a lot of market players looking to buy dips. They missed out as the market ran away and now they want to make sure it doesn't happen again.
On the other hand, if you look at the action within the trading range since the beginning of August, the pullbacks following one of these V-ish bounces have been quite sharp. I attribute that to the high-frequency trading programs that go into reverse and help build momentum to the downside once we top out.
I doubt that too many folks are unhappy about a little weakness. The bears for obvious reasons and the bulls because we simply need some rest after this fast, low-volume, 10% move.