Equity markets have been trading heavy for several days, despite the taper delay and some decent economic data. This means the market is probably due for a corrective pause.
Yes, the good headlines outnumber the bad. The Federal Reserve is still behind this market in a big way, with Chairman Ben Bernanke refusing to slow the pace of asset purchases. And it appears very likely that Janet Yellen will be the next Fed chair, which will mean more easy policies going forward.
(Read more: The million-dollar bet that markets will get rocky)
But sometimes, all the good things that can happen, have happened —and that appears to be where we're at right now. All the bullish headlines have already been priced in. That means that the risk of staying in this market outweighs the reward.
So how am I trading the S&P right now?
If the December S&P E-mini futures trade down to 1,688, that will constitute a confirmation of the bearish momentum, so that's where I'm looking to sell. The downside objective on that trade is 1,655. But a subsequent trade up to 1,710 will convince me that I was wrong, and that the broader rally is still intact.