I am going to start by giving the bull case. Everybody and their mother thinks that QE II will be a sell the news event. Many are looking to buy the ensuing pullback as few believe the pullback will be deep. Since when is the market in the business of giving everybody what they want? There is also the fact that sentiment refuses to turn bullish to an extreme as is usually the case after such a strong, extended rally. Add to all that the well known bullish seasonal factors.
All this keeps me from trying to fight this rally but I cannot get behind it either. The market is extended and while sentiment is not extreme, it is overly bullish. The fundamentals for the market and this rally are built on fragile foundations as those who buy on "liquidity" can easily turn sellers for just as flimsy a reason as we saw in April. In addition, I am finding less and less individual stocks that seem attractive. I am still agnostic and waiting for better opportunities.