The market was set up for a correction last week as it was overbought on both a short and intermediate term basis. However, the bears were not able to do anything with it as is often the case in a strong trending market during expiration week. Often times a correction must wait until the week after expiration which is where we are now. Sentiment is somewhat supportive of a correction as we are nearing extreme optimism but are not quite there yet.
There was a change of character in the market on Friday. Every time in the past month the market looked like it was going to start correcting, the put buyers would come in as everybody wanted protection. During the dip on Friday the crowd was still buying calls as they finally learned that even the smallest dips are buying opportunities. Normally I would view this as a significant event but I don't like to make too much of option activity on expiration as the activity might be expiration related.
The market is stretched from a time, price and sentiment perspective. These are not conditions under which I am comfortable buying. I am admittedly hoping for a lower market as to allow for better opportunities.