Although the S&P 500 SPDRs (SPY) did not put in a key downside reversal session, which means that today’s weakness off of a new high is likely to have near-term trend-changing implications, I exited my long position nonetheless. That was largely because today represented the third consecutive session that the SPY bumped up against the upper Bollinger Band, which usually resolves itself in reaction weakness – towards a test of the mid-point, 20-day moving average (now at 141.88). We should not be surprised to see the SPY press lower during the next session or so, towards the mid-point of its two standard deviation range – at 141.88.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.