Mark Leibovit, chief market strategist of VRTrader.com, says the market is looking tired and is ready for a sell off.

[Last] Friday's action pretty much added icing to the cake regarding my view the market has experienced a short-term top—perhaps even an intermediate top.

Downside potential in the Standard & Poor’s 500 index is still, I feel, about 100 points or a move down to the 990-1000 level. If we rally to S&P 1120-1130 first (i.e., 10,300+ in the Dow Jones Industrial Average), the decline would simply come from a higher level and may be even more sharp.

It is almost beginning to look as if the “positive” earnings reports were merely keeping the market afloat as the smart money has been exiting by selling their shares.

The earnings are being spun as positive by the media because companies are beating seriously watered-down expectations. The party looks to be over short term and traders are heading for the exits.

The market has clearly created a top over the last couple of weeks. Now, we just have to see if support holds. We have the 50-day moving average at 1048 on the S&P and, if we break through that, the 1019.95 low from earlier this month. The trend is down!

The indexes have created negative divergences, which is one reason I switched to a Sell signal. The Dow Jones Transportation Average created a lower high even when the market was rallying and then another at the second top. That double top is looking more ominous, especially if the Transports fall through support at the 3655.77 level. (They closed above 3700 Tuesday—Editor.)

I remain on a Timer Digest Sell signal, with the view that unless major trend lines are violated and significant down side volume doesn't appear, all we're experiencing is a long-needed correction. In other words, time has run out of the current rally phase.

During this pullback, gold may retrace a bit more and the US Dollar Index may recover, [but] my gut feeling is that we should not be fighting the down trend in the dollar or the up trend in Gold, but stay tuned.

Treasuries [have fallen] sharply, despite the falling stock market, as traders focused on a huge glut of supply coming to market this week and when the Federal Reserve will raise rates. The long bond future is trading at its lowest levels since September 9th. Likewise, the 30- year yield is at its highest level since September 9th while the ten-year yield is at its highest since August 24th.

The US Dollar Index staged a rally to two-week highs. The US Dollar Index was up 0.593 to 76.061. In truth, I was looking for a correction in gold and stocks and the dollar has been running inverse to these markets, but I couldn't bring myself to buy the dollar—too many false starts to date. When a discernable up trend is in place, then I will get interested.

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