So far bulls has been in charge since November lows 2012 and they have still been able to hold markets higher , even with every indicator screaming sell. This is how markets works and I guess I have been a bit wrong going short a little too early in the markets. However I still believe a correction is very much due and when it starts should take us down a lot lower from where I began to buy shorts.

Here is what I see near term:

1. VIX is forming a bullish inverted head and shoulders pattern on daily chart. My weekly chart have a CONFIRMED bottom signal in the VIX – so I think VIX has bottomed and will move higher from current levels. With VIX going higher I cant see markets going a lot higher. Again VIX has been very low lately but markets has still gone higher.

2. ES futures hit the upper trendline from previous tops , and could very well mark a top. However SPX needs to get below 1496 this week to get WEEKLY confirmed sell signals , until then bulls so far still in charge, but a break below 1496 would mark that this rally has topped out.

3. Dollar looks bottomed , looking at the daily chart below lower bollinger band , forming a red hollow candlestick usually bottom candlesticks – so a higher dollar near term would result in mkts lower near term. Euro been surprising strong, but I see big warning signs on it.

4. February the worst month per statistics post election years , so a big slide is usually happening in February and once again I think this will be no different.

5. NYSI remains extremely overbought too , as so many other indicators showing EXTREME overbought + negative divergences.

CONCLUSION: To summarize everything short. BULLS are so far still in charge , a break below 1496 this week would confirm a top is in. Everything is overbought on all indicators with daily chart bearish divergences, seasonality is extreme weak , actually weakest for this month February. Bears have so far not been able to push mkts lower , but in my estimation we got a 80% chances that markets will correct within this month and most if not ALL of January gains will be lost. Therefore I’m holding my shorts tight. Of course its a hard bet, but as we are at the extreme of extreme both with a low VIX and everything extreme high (RSI) – this will result in lower markets 80-90% of the times. I’m still a hungry bear holding !