High volatility continued today with the major indexes gapping up at the open and climbing from there before selling off in the late afternoon. An unexpected boost of 15% in April's new home sales and a 2.9% increase in durable goods orders helped fuel the early optimism. Many attribute the sell-off to a Financial Times article suggesting China is considering lightening their substantial Euro holdings, driving the Euro lower late in the day. RUT held up better than the other indexes, closing up $3 at $643 while the SPX dropped $6 to close at $1068. Trading volume was down at the major exchanges with a 9% decline on the NYSE and a 7% decline on NASDAQ; but the S&P 500 traded almost 6 billion shares, near yesterday's high levels. Today's trading action just reinforced the nervousness we have seen on the trading floors so often of late.

Today's candlestick on the SPX chart was the classic shooting star, a common reversal signal when it occurs at the top of a bullish trend; SPX is certainly not in a bullish trend, but it is disconcerting that the buyers who took the markets up early in the day could not hold those highs. So today's trading action may not be an indication of a further leg downward, but it does suggest we may have difficulty resuming a bullish trend anytime soon.

I sold the RUT June 590/600 put spreads this morning to begin to recreate my June iron condor. But the late day trading reversal certainly worries me after establishing that position. We'll see what the market brings tomorrow.