$ index remains firm near recent highs, but the sharp gains from Feb. 1 are seen part of a much larger period of wide ranging (months) and not the start of a major, new upleg (see longer term below). Note the series of three-wave moves since the Sept low at 78.60 (A-B-C's, argues still in a large "complex" correction/consolidation), and the possible head and shoulders pattern since Jan 2012. Additionally, the market is overbought after the surge from the Feb 1st low at 78.90, is within the previously discussed 82.90/10 resistance area ("ideal" place to form a more important top", area of right shoulder of head and shoulders/ceiling of bull channel from Jan 2012, bearish trendline from Jun 2010), the seasonal chart, which is lower into May, and sentiment is broadly bullish (contrary indicator), all adding to the view of an important topping. Nearby support is seen at the bullish trendline from Feb. 20 (cur at 82.10/20).
Strategy/Position: With lots of negatives, want to be short and would sell here (currently at 82.80). However, there remains scope for another few days of topping (and even further, but likely limited gains), so will initially use a wide stop on a close above 83.25 (just in case).
Long-Term Outlook: As discussed above, the market is seen within a larger period of ranging/consolidating since the July high at 84.10, which is likely not "complete". This in turn leaves open scope for another month (or more) of wide ranging, with potential for declines toward the neckline of the large head and shoulders pattern (currently at 78.90/05), the Sept. low at 78.60 and even temporarily below as part of this larger period of consolidating (see in red on weekly chart/second chart below). Also don't forget the long discussed support just below the 78.60 low at 78.10/40 (both a 50% retracement from the May 2011 low at 72.70, Feb 2012 low), and that markets have a way of eventually reaching these key, longer term areas.
Strategy/position: With further near term gains seen limited (see above) and potential for a important top forming, looks like a good risk/reward to also switch the longer-term bias to the bearish side here (currently at 82.80).