Technical Outlook:

• SPX followed up with Friday's afternoon recovery with a bounce to the upside yesterday that saw price reclaim the 20-day moving average and stall out at the 5-day moving average.
• Technically, very little improvement. On the 30-min chart of SPX, the rally simply took price straight into the neckline resistance of the head and shoulders pattern that has its roots back to mid-April. 
• Volume on the SPY yesterday was pathetic. Another red-flag. There was no enthusiasm for the rally, and little participation as well. 
• SPY is looking at a significant gap down this morning. Don't put too much stock in it though. Of late, these have been major opportunities for the bulls to buy the dip and rally the market higher in the days that follow. 
• But if the bears can build on the day's weakness and drive the market lower, then you may very well have a change in the character of this market. 
• There really hasn't been any significant sell-offs of late, minus the price action from 4/28. Most of the selling gets bought up before the end of the trading session, thereby limiting the scope of the downside. 
• VIX was absolutely crushed yesterday, dropping 6.5% down to 14.63 and feeling the rejection at the base breakout at its highs of the day. 
• Last week marked the first time in eleven weeks where SPX finished below the previous week's trading lows. 
• Yesterday officially kicks off the "Sell in May, Go Away" theory. Last year the market peaked in May before trending lower the rest of the year.
• Historically the May through October time frame is much weaker than the rest of the year.
• It is very important to be aware of the potential for a strong pullback here and to manage your long position risk accordingly. 
• Yellen's dovish outlook as it pertains to rate hikes has been, in large part, the reason for the massive rally off of the February lows. 

My Trades:

• Covered IBM yesterday at $145.41 for a 2.6% profit. 
• Added one new position to the portfolio yesterday.  
• Currently 20% Short / 80% Cash
• Remain Short: IWM at $114.05
• Will look to add 1-2 new short positions today if the market seeks to push lower. Will flip to the long side if price action can break out of the current trading range. 

Chart for SPX: