S&P 500 Index (SPX) 3901.36 declined for the seventh week, this time loosing another 122.53 points or -3.05%. After making a new intraday low on Friday at 3810.32, it made a remarkable reversal late in the day to close slightly higher.

After almost making a reversal the previous Thursday, subsequently confirmed the next day, last Monday it appeared confused without directional conviction trading in a narrow range. That changed Tuesday as upside momentum resumed led by the Information Technology sector gaining 2.91% despite diverging from the interest rate on the U.S. 10-Year Note that advanced 10 basis points to 2.98%.

Wednesday the picture changed dramatically after Target (TGT) missed the mark stoking recession concerns with all sectors ending in the red for the day. Reflecting the instant change in sentiment, the yield on the 10-Year Note declined 9 basis points to 2.89%. Thursday followed Wednesday's downward momentum while the yield on 10-Year Note declined another 4 basis points following SPX lower.

Friday opened in the upper part of Thursday's range but then turned lower, defying early expectations for a monthly options expiration rebound and another reversal. At 2:00 p.m., it looked more like another lower low than a reversal. However, like pulling a rabbit out of a hat, at 3:15 p.m.(see the green arrow in chart below) it abruptly shot up gaining 69.78 points in a half hour to close slightly in the green, just making the earlier expected reversal.

Since monthly options expired on Friday, some part of the late rebound could possibly be attributed to short covering as well as market makers attempting to cancel some in-the-money puts. After the reversal, expect a higher high on Monday, but not much more based upon the feeble last two bounces.

Friday the yield on the 10-Year Note declined another 6 basis points ending the week 15 basis points lower at 2.78% with QT (actual monetary tightening) scheduled to begin in less than two weeks.

Once again, the options market confirmed the late day bounce as implied volatility, IVX declined .39% to end the day at 26.22%, but up from 26.00% on May 13.

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Market Breadth as measured by our preferred gauge, the NYSE ratio adjusted Summation Index that considers the number of issues traded, and reported by McClellan Financial Publications. Last week after reaching -861.94 on Monday, it stopped declining and ended the week 9.65 points or +1.13% higher at -846.84. While it may only be a pause before making another leg down further breadth improvement could signal selling exhaustion as unlikely as that seems ahead of the Federal Reserve's implementation of QT.

While divergences often act as early warning signs of impending trend reversals, it seems premature to conclude last week's interest rate decline reflects a change in trend. However, it may be worthwhile to keep this quote in mind:

"Whenever the market does not act right or in the way it should - this is reason enough for you to change your opinion and change it immediately, "- Jesse Livermore, How to Trade in Stocks, p.71.