Despite some very recent improvement in the broader indices (now off -0.2%), today’s intraday trading could still prove to be a very critical technical catalyst for the remainder of this week’s trading. In what’s known as an “outside reversal,” the S&P 500 saw today’s intraday high higher than the high of the previous trading day, and, likewise, NEARLY saw a low lower than Friday’s low.
Typically, if an outside reversal occurs at a security/index support level, this is a bullish indicator; if it happens at the resistance level, this is a bearish indicator. If the S&P 500 closes today below 1,545 (Friday’s low), this would be viewed as a bearish indicator, albeit in a holiday shortened trading week. Perhaps most interesting is the fact that this potential outside reversal is happening when the S&P 500 is battling in a tight 20 point range (1,545 -1,565) to break higher to all-time record highs (all-time closing high previously set at 1,565.15, set on Oct. 9, 2007).