The S&P 500 is a low risk short right now. Just to be clear, low risk does not mean high probability. By low risk I mean the levels that invalidate the bearish case are close, and there is evidence aplenty to support the bearish case.
The first chart shows the big picture on a monthly candlestick chart. The S&P 500 last night tested the top line of a trend channel that has contained more than 90% of market action since mid-1997. Betting on a clean break is betting against that much history. Also note the bearish momentum (MACDH) divergence leading in to the March peak, warning of weakness.
Second chart is a daily candlestick chart of the S&P 500 since the beginning of 2011. The market is trading in the middle of a resistance zone formed by several significant highs and lows of the past 18 month. The market needs to get over the top of the zone (1380ish) to break resistance and invalidate the near term bearish case.
Third chart zooms in to 2012. This is where I turn up the Avid dial. The chart shows a clear five waves down 1-2-3-4-5 from the March peak, defining the trend as down under Elliott Wave Theory, followed by a potentially completed three wave upwards correction A-B-C. Last night's high was a perfect Fibo 0.618 retracement of the decline from the March high. Aggresive traders would look for evidence of a turn down beginning from last night's high (1364ish), and use that as their risk control level, rather than the top of the resistance zone shown in the previous chart.
All charts include after hours trade. Of course, if the risk control levels for the bearish case are close, that means a bullish case is brewing, though not yet active in my view. See Peter Brandt's post on the NASDAQ for more on the bullish case.