Stocks scored their third straight session of gains since recovering from last week's sell-off, but several key resistance levels caused the major indices to surrender nearly half of the day's gains in the late afternoon. After trending higher throughout most of the day, then pulling back in the final ninety minutes, the Nasdaq Composite gained 0.9%, the S&P 500 0.5%, and the Dow Jones Industrial Average 0.4%. The small-cap Russell 2000 again showed a bit of relative strength by climbing 1.0%, but the S&P Midcap 400 lagged behind by closing just 0.3% higher. All the main stock market indexes finished near the middle of their intraday ranges, essentially putting the bulls and bears on parity into the close.

Turnover crept higher across the board. Total volume in the NYSE was 3% greater than the prior day's level, while volume in the Nasdaq picked up 6%. Although it was the second day of increased trading activity in the broad market, volume in both exchanges remained below average levels for the fifth straight day. As with the previous day's session, stocks again climbed on mediocre market internals. Advancing volume in the NYSE exceeded declining volume by a margin of only 3 to 2. The Nasdaq adv/dec volume ratio was positive by just over 2 to 1.

For those of you long any of the numerous oil-related ETFs, the sector flashed some very important warning signs yesterday that a top may be forming in the near future. First was the intraday price action of the crude oil commodity, which is demonstrated on the 15-minute intraday chart of the U.S. Oil Fund (USO), an ETF proxy that roughly follows the price of crude:

After opening 1.4% lower than the previous day's close, USO quickly reversed its opening weakness and rocketed higher as the government said crude inventory had dropped to its lowest levels since 2004 during its 10:30 am ET weekly report of crude oil reserves. This bullish news for crude oil should have had an overly positive effect on its price action throughout the rest of the day. Instead, however, traders aggressively sold into strength of the knee-jerk reaction, causing crude to drop back down to its opening level just one hour later. The heavy selling continued into the afternoon, eventually leading both the crude oil commodity and USO to close the session with a 3.4% loss. When a steadily uptrending stock or commodity drops sharply in the face of positive news, as crude oil did yesterday, it is often a warning sign of exhaustion. Conversely, it's typically a bullish sign when traders ignore negative market news and send a stock or commodity higher regardless of bad news.