Get ready for another market pullback! Just when the economic pundits thought we were out of the water, it’s time to play contrarian and take advantage of their herd mentality.

Sure, the gains in the Dow Jones Industrial Average and other indices as well appear impressive. Actually, it was more of a short-term opportunity for the bulls to ride the dead-cat bounce up just high enough to close out of their long positions with a small loss.

On the longer-term chart we’re looking at major resistance near 12,750 – just below the bearish head-and-shoulders neckline. We’ve already tested this resistance unsuccessfully and you can rest assured that the bears will come out to spoil the party once again.

It’s not enough to look at the long-term technical setup and call it a day. I needed a short-term outlook, so I took to the charts once again to see how the situation had evolved on the 10-day hourly view. The S&P500 (SPY) looks prime to see some downside over the next several days. Significant selling into the rally eclipsed the breakout last week.

I’m also seeing a negative divergence between price and the Relative Price Strength (RSI) indicator on this time period as well for SPY. Momentum is evaporating right before our eyes. It’ll be like taking candy from a baby.