We’re Due for a Pullback.

The S&P 500 looks like an “up” escalator over the last month, but we’re due for a pullback.  Here’s why:  1) Obama delivered his state of the union address yesterday, and the markets always tend to decline after Obama speaks (even more than they already did today).  2) Yesterday the Fed announced plans to keep rates low through 2014 which resulted in a pop in the market.  This pop added to the market’s elevated levels and makes its current level even more precarious.  Plus, it’s not a good thing that the Fed is still so scared that they’re locking in low rates and asking the president for help in the housing markets.  3) The World Economic Forum is taking place in Davos this week.  These types of world economic leader gatherings tend to gather optimism followed by disappointment (they’re not really going to solve the Greek problem anytime soon), and the markets tend to decline after such gatherings.  4) The VIX is below 20.  This hasn’t happened in over a year.  Volatility is persistent, it doesn’t just go away, and it signals to me we’re ready for some heightened volatility and a pullback in the market.  Obviously, I don’t know for certain where the market is headed, but I believe the odds favor a pullback over a continued rally, and I’ve put my money where my mouth is.  As always, stay tuned and be ready!