Hit the Ceiling

And it isn't that high.   There is very little potential upside in this S&P market.  Same goes for Europe or emerging markets.  They are all near the top of their moves.  The risk/reward for longs is getting worse.

The excuses don't matter.  It's because of Comey.  Trump is getting impeached.  It will delay tax reform.  Etc.  The market got too comfortable post French election, and it needs the periodic dips to keep the market honest and the bulls on their toes.  That is how the market operates in the absence of a significant supply/demand imbalance.   The market is sufficiently high and saturated that it has trouble staying up for long without these little dips.

Although we are still getting equity inflows and some buybacks, the IPO supply has been increasing lately, and that is what weighed down on the market last week.  Seasonally, it is also getting to be a bad time of year, as we approach summer, and ahead of a potential ECB tapering announcement and another FOMC rate hike.

On the positive side, the VIX tells you that a big drop is very unlikely.  It remains very low, and reluctant to go higher.  The first sign of market stress shows up in volatility, as volatility rises along with the market.  That is far from what we currently have.  Another positive is the strength in the bond market, which is a positive for all interest rate sensitive sectors.

I am not in the "will be a big bubble" camp.  It feels more like a chop in a narrow range for a few months, and then drop situation.  So not outright bearish, but definitely not bullish.  Sort of like 2015.

By the way, the market may be inactive, but that's not necessarily a bad thing.  The less volatile markets while less profitable, are definitely more relaxing and less stressful.  One can't always be in top gear.  The active times will come again.  It is sometimes good to be able to trade less and observe and not worry about missing any opportunities.