Volume was higher on the NYSE giving the S&P 500 a day of distribution, but it was below average.  Selling hit the market just after noon eastern and continued throughout the afternoon until the close.  NASDAQ experienced higher volume than yesterday giving it a distribution day.  Like the NYSE volume was below average.  Small cap stocks as measured by the Russell 2000 outperformed the broader market.  At least there were some positives on the session.  Today was not a great session by any stretch.  However, it was not that bad if we can see this market reverse course and move higher.

A breakdown in the S&P 500 shows Utilities were the biggest losers on the session.  Healthcare, Financials, and Energy were not too far behind.  Interesting to see utilities hit as the long bond rallied today.  Who is right…the bond market or the equity market?  The mantra typically is the bond market is always right.  If you simply follow the trend the answer really doesn’t matter.  TLT is in a long term uptrend whereas XLU is in a downtrend.  Not to mention there is quite a bit of distribution over the past two months in XLU.  The biggest winner within the S&P 500 was Software and Services with GOOGL, FB, and EBAY leading the way.  TWTR isn’t in the S&P 500, but it broke out too and can be grouped with these stocks.  It pays to stay with the trend and these prevailing trends continue to be outstanding.

This two day pull back is not ideal, but it is far from bad.  Below average volume pullbacks are nice and while it would have been nice for volume to subside it was not that much higher than yesterday.  Keep in mind Monday’s for as long as we can remember have been notoriously low volume days anyway.  Hard to put too much weight on volume here at this point.  However, if we continue selling and volume expands even further would be a big red flag for this market.  Since we do not trade on what-ifs rather than what has occurred we will continue with the prevailing trend.

Keep those losses small and ride your winners!