False Breakout

The market established a desirable level for the past month by trading in a tight band, mostly between SPX 2260 and 2275.  Yesterday we finally got a little breakout, and it is continuing in the premarket, looking like a breakout from a long base.  If this was 30 years ago, and there weren't so many traders looking at the charts and trying to play breakouts, the move could have a lot of meaning.  But these days, these breakouts tend to be better fades than trend trades.  These breakouts would have much more staying power if it was long term demand from retail and institutions, not short term demand from fast money.  Considering that much of this buying was pent up demand waiting to buy a post-inauguration dip that didn't arrive, you can be sure that it is fast money demand.  Odds favor that this breakout will fail, and we'll go right back into the comfortable tight little range that we've established.

Perhaps give the post-inauguration fast money a few more days to establish their positions, and then it could be time to get a short position on.  This is still Trump's honeymoon period, and the market still has a lot of hope for his fiscal stimulus.  Market is already fairly long, so I see limited upside from these levels.  Just like first quarter 2015.