It looks like they will try to take the market higher today, after they couldn't take it down yesterday. Sometimes the market is that simple, even though I'm sure the major news outlets will assign some news based reason for the move higher this morning.
The action yesterday was not that different from what we saw at previous tops in the past few months. Milling around at the highs before a sharp break lower. The chart below is of the S&P 500 and shows the last 3 corrections. I marked the milling around period with a red line followed by a sharp move lower.
Chart from Yahoo Finance
Sentiment is in place for a top as talk about a year end rally is getting loud. The market has rallied 7% in two weeks, yet two weeks ago there was only put buying and little year end rally talk. The divergences continued yesterday as decliners handily outpaced advancers even though the market ended higher on the day.
If we get a move higher today, it will be very tempting to add to my net short position. However, I will try to resist as I don't want my short position to get too large at this time of year.