The Sentiment Tide

(Kirkreport)After yesterday’s gap reversal, the market struggled to find its footing today.

While we started the day off strong, S&P 1,090 proved to be very strong overhead resistance. News that China is reviewing its Euro holdings certainly didn’t help matters. Yet, we now will get to see if that possible right shoulder of the inverse H&S pattern can form over the next couple of trading sessions as we close out May.
For what it is worth, most of the traders who I spent a lot of time with today are convinced that if the market doesn’t hold Tuesday’s lows at S&P 1,040 then all long bets are off. Indeed, we have a nervous market out there at the moment with traders unwilling to give long positions much rope if any. In fact when you see these intraday reversals, it is a clear sign that traders aren’t willing to even hold overnight for fear of being caught in a negative gap the following morning.