The S&P stalls—here comes the fall

NYSE traders
Adam Jeffery | CNBC

If it stalls, it falls! That's certainly the case when it comes to this S&P 500.

As the market has filled in around the psychologically important 1,700 level in the S&P, we have seen a slight stall in momentum, as the continued record highs have come in drips and drabs.

Technically, we usually like to see a blow-off top with lower closes to embrace any type of a bearish divergence. However, after such a sensational yearlong rally, it feels like the levee may be indeed dry on this Chevy.

In order to sell this market, we need confirmation under 1,692 in the S&P E-mini contract. Technically, there is a lot of room to back-and-fill on the chart, as the multiyear highs that were fiercely shattered sit down at 1,576 in the S&P.

(Read more: The secret small-cap warning sign)

Shorting the market in 2013 has been about as fun as being zipped up in a body bag, but this year's 20 percent rise is simply not supported by data points such as 162,000 new jobs in July.

I am not convinced that we will dip as low as 1,576, but 1,630 is our target if indeed we close beneath 1,692.

(Read more: Stocks are looking effervescent, Shiller warns)

This is bolstered by the fact that this fall could bring some unpleasantness. Fiscal woes, global macro headwinds, Japanese volatility due to Abenomics, and the China wild card should all tamp down stocks for the time being.

Lastly, with the VIX again near all-time lows, it is apparent that the market has become complacent. This is typically when investors can get caught offsides.

By Jeff Kilburg, CEO and founder of KKM Financial. Follow him on Twitter @TheKillir

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