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After flirting with an all-time high for three weeks, the S&P 500 posted its best closing level in history. But some strategists say Thursday's record could be a harbinger that the stock market rally is running out of steam.
The S&P traded within 10 points of the all-time closing high for 13 sessions before breaking through, showing that investors need new catalysts to push firmly above resistance levels.
"As the market has gone higher upward moves have generally gotten smaller, which suggests that the move is getting old and that we need a pullback," said Mark Arbeter, chief technical strategist for Standard & Poor's in New York.
The benchmark index has risen almost 10 percent so far this year, fueled by strong profit growth and accommodative monetary policy from the Federal Reserve. But those gains have slowed as investors fret over Cyprus's bailout and mixed signs about the economy.
The broad index is also within a stone's throw of its intraday record of 1,576.09. The Dow surpassed its record close on March 5 and set a series of records, ending Thursday at 14,578.54.
The S&P has risen for 11 of the past 13 weeks, up 0.4 percent over the past two weeks. In contrast, the CBOE Volatility index .VIX, a measure of investor anxiety, is up about 14.5 percent over the same period.
"The increase in volatility we've seen is far more likely to be the sign of a short-term top" than the trend of investors buying on dips, Arbeter said. "If that volatility persists, then you would need to worry about an intermediate top."
In addition, speculator positions show a preference for holding long positions. Mike O'Rourke, chief market strategist at Jones Trading, noted that long positions account for more than 65 percent of speculative positions in futures contracts, a point at which rallies can be overextended.
U.S. markets will be closed for the Good Friday holiday and reopen on Monday.
The stock market next week will face tests of the milestone it reached, with the situation of Cyprus's banks and a round of U.S. data, including the March jobs report on Friday, facing investors.
