SPY is in overbought territory and facing a resistance level. In addition, my proprietary indicator, the MEI, shows loss of momentum and diverges to the downside. My estimate is for a 2% correction in the next few days so that the market can form a new base and gather momentum away from overbought conditions.
It may be seen from the above daily chart of SPY that the RSI(14) is slightly above 70 but the MEI(14) is falling towards the zero line. The ETF closed on Friday just a few cents below the resistance from its April 2011 high at $137.18. These conditions combined point to a small correction in my opinion.
Disclosure: no relevant positions.