I continue to be of the opinion that we should see a correction start by next week at the latest and that the correction should reach 1150 on the S&P 500 at a minimum. I don't see a correction being as strong as the one we saw in January. May seems like a better time for a big move down as seasonality becomes a headwind, the stimulus starts wearing off and comparisons become a lot tougher. The caveat is that if the government sells its Citigroup stake I think the current correction could be very large.
The reason I don't believe we will see a correction as large as January's is many indicators are not as stretched as they were in January and this part of the year is seasonally strong. People are shoveling their tax refunds into the stock market, which is why seasonality is in the market's favor right now.
Another indicator that is not as stretched as it was in January is Rydex. Short positions are pretty much as low as they were in January, but long positions are a lot lower. This jibes with what I am seeing anecdotally. The bears are demoralized but the bulls are not thumping their chests the way they were in January.