Cautiously Bearish.
Today is the follow up day for bears to take the market down.
The choppiness near the top is creating a set up of possible pause in the rally. Yesterday I was expecting S&P to remain below 1565 to keep the short side trade intact but instead it moved up. In pre markets session today, it is trading around 1557 giving up most of yesterday gain and leaving a nearly 10 points gap down, yesterday market had a gap up which was never filled. These sort of situations demand caution. The trend is still on the bullish side but there are several signs indicating a fatigue and I am not planning to take a big position either way. I will update the comments as the day develops.
Today again I would expect to find resistance in 1563-65 area move down to 1542-45 area. Only a decisive break from outside 1572 or below 1540 would indicated that market is taking a view on future direction.
My hypothetical stock portfolio is short as of now. I am looking to add some defensive stocks in the portfolio given the rally now is driven by defensives.
The trend is still bullish and calling tops is futile. However please have a look at this post from longer term perspective which is keeping me cautious at these levels. After writing this post Copper, Gold and other industrial metals have dropped like a rock. The stock markets are supported on hope but the earning season can err on the side of disappointment this time. Sell in May is also not far off. Caution Required.
