Morning Notes — SPX

We continue to view the recent pullback in the SPX as a pause rather than the beginning of an immediate, deep correction.  Market tops aren’t usually made on accelerating price momentum, broad sector participation and still-elevated bearish sentiment.  Market tops typically include internal divergences and decelerating momentum indicators.  Those conditions existed in late January, not last Wednesday.  Expect a retest in coming weeks if the SPX gets through ~3480.  And expect an easier time for value/cyclical sectors where positioning isn’t crowded and valuations remain below historical averages.