How to Read Today's Price Action in Stocks (SPY, QQQ)

The answer in one word: don't. Stocks had a volatile day, trading down as much as 1.25% this morning before rallying. Rumors of a Spanish bailout circulated earlier this morning, but were quickly denied by all parties. The IMF claims to have simply been discussing the idea of a Spanish bailout internally, as they should be, for should the circumstances arise that Spain needs a bailout, the IMF should be prepared to act.

Later in the day, stocks floated around slight losses and even, with the Dow outperforming and the tech heavy Nasdaq lagging. Towards the end of the session, all three major indices turned positive, as the re-balancing of portfolios due to MSCI re-balancing its indices (a monthly event) caused lots of turnover.

So, to answer my question in slightly more depth, nothing really changed today after the economic data releases this morning. Various indicators, including the Chicago PMI, first quarter GDP release, and initial jobless claims, all showed a deceleration in economic growth. Afterwards, rumors and re-balancing ruled. Do not read too much into this afternoon's price action as it was largely controlled by once-a-month factors. Tomorrow, with the release of the non-farm payroll report, will really test the health of this market.