The S&P 500 has rallied over 100 points without pulling back. The breakout above 1130 yesterday has finally swung sentiment firmly into the bullish camp, after investors had been fighting this rally tooth and nail the whole way up. Two massive secondary offerings from Petrobras and Deutsche Bank are about to hit the market and a flurry of smaller secondaries were announced after the bell yesterday. All these strongly argue for a pullback in the near term.
A decent case can be made for a continuation of this rally on an intermediate term basis, as hedge funds are still underweight stocks and corporations continue to repurchase shares. But in the short term the bear case seems more compelling to me.
The FOMC rate decision will be announced today. There is typically a lot of volatility surrounding these decisions. I will be looking to use that volatility for an entry point on the short side. Additionally, by that time most of the "breakout" buyers should be done.