Short Term Pullback

I am going to make a case for a short term pullback, with one caveat. This rally only started in earnest a week ago and market participants were very under invested heading into it. One week has likely not changed that dynamic by that much. While I believe we will see a pullback, the short side is far from a slam dunk.

The S&P 500 has rallied 5.5% in a week, making the market overbought in the short term.  Seasonality has turned negative and short term sentiment is no longer excessively bearish.We saw some signs of excess bullishness like the ISE equity only well above 200 for two days in a row.

While I believe we will see lower prices, all the ducks are not lining up on the short side. As a result, I have moved closer to market neutral but am not interested in the short side yet.

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