Just to put this into context, I rarely ever short stocks or the indexes for that matter. However the market has become very overbought in the short/intermediate term. People have the notion that the Fed will continuously back the market via monetary policy, so there is no reason to be fearful. That is the DEFINITION of complacency.
Concerns: 1) executive/insider dumping at rapid rates. 2) Soros 1.3 bil put option 3) Klarman lack of buying 4) bond markets are experiencing massive inflow 5) equities are clearly overvalued 6) indexes have moved sideways for the last 4 months
Technicals: MACD (#1 indicator) turned bearish about a week ago...others ones reinforce bearishness
Chart: A rising wedge can be a candlestick formation that leads to a serious downtrend when it breaks the support. We also hit a double top in the last 2 months.
Seasonality: Many traders/investors cycle out of equities due to enhanced volatility during April and May...until November.
Sentiment: Many people are still bullish since we hit another all time high. This is faulty logic, people should become more speculative. Momentum stocks are starting to sell off as well..this could be a foreshadowing.
Conclusion: Buying the SPY at $190 is irrational in my opinion.
Comments
Tech_time
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The derivative oscillator indicates approximately 3 months...but I think traders are going to follow the seasonality trend (sell in May). VIXCBOE is also starting to bottom in my opinion.
Tech_time
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Testing this long term support; still favors the bears. This type of intra-day action (04/10/14) is called "no lift" which is referred to as mass institutional liquidation.