Near term I have no change in my thinking that some sort of rotation correction occurs. Yesterday, the Spoos stalled again at the 1500 round figure for the third day in a row. This morning the market breaks an eight day trendline speedline of its fastest uptrend as sentiment remains frothy complacent.
An example of rotation and the pain it inflicts on many longs leaving at once includes DDD (and SSYS). I mentioned DDD yesterday. I rode it up and pitched it out into the island top that developed.
The NYSE McClellan has been consolidating in the overbought area and has made a near term lower high and moved back down under my first (of two) overbought level. This suggests higher odds of more internal selling pressure.
The aggregated stock RSI overbought indicator I wrote about yesterday has turned down but is still above the three standard deviation level.
Frankly, I expect a correction of less than 5% given the strength of momentum in the overall market and financials/homebuilders more specifically. There certainly is a chance that the market corrects just 1-2% here, moves sideways for another day or two and rallies on Feb new month moneyflows. We will cross that bridge if/when it happens.