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Updated from 3:53 p.m. to include information about Friday's close, individual stocks leading the S&P 500 higher in 2012.



) -- Just when the bullishness was

reaching a crescendo

, the plans to float Greece another couple bucks hit a stumbling block (shocker!), and

stocks sank


But whatever the headlines from the old continent, at least one chart watcher says the technicals are pointing to a good old-fashioned sell-off for equities.

"We believe the current stock market rally has ended and that stocks are vulnerable to a 3% to 5% pullback over the next four weeks or so," writes Mark Arbeter, chief technical strategist at

S&P Capital IQ

, in commentary released Friday. "Some of the major indices have moved very close to some of our key technical targets, and at the same time, we're seeing some frothy sentiment indicators as well as some very overbought price and market internals."

Arbeter isn't turning bearish though. He just thinks stocks are due for a breather.

"Once a potential pullback runs its course, we look for new recovery highs for the market," he says.

Stocks have traveled nearly straight up in 2012, rebounding after a lackluster 2011 where the

S&P 500

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was virtually flat, the

Dow Jones Industrial Average

tacked on 5%, and the

Nasdaq Composite

lost a little over 2%.

The S&P 500 was up 7.5% on a price basis through Thursday's close at 1352, its fastest start since 1997; the Dow had gained 5.5%, clawing back to within shouting distance of 13,000; and the Nasdaq had surged more than 12% in 2012, returning to levels unseen in more than a decade.

And while 2011 was marked by extreme bouts of volatility, especially from late summer when the Standard & Poor's lowered the U.S. government's credit rating through the first half of October, when the current surge began, 2012 has mostly been a slow melt-up. Low volume, steady gains. Triple-digit swings in the Dow have been few and far between, along with 1% moves in the S&P 500.

It's the sheer heights that stocks have reached though that sounded the alert for Arbeter.

"First, it

the S&P 500's climb this week represents key chart resistance from the high last year," he writes. "Many times following a major correction, the old highs represent an opportunity for profit taking. In addition, the 1,355 to 1,380 region represents pretty decent overhead supply."

Arbeter also notes some established technical patterns are playing out, saying the S&P 500's advance toward the 1355-1380 region "will complete the measured move based on the breakout from the inverse head-and-shoulders (H&S) formation that occurred in January," and that "an initial

Fibonacci extension

based on the size of the inverse H&S pattern also targets this region."

So how low does Arbeter expect the S&P 500 to go and when should investors think about jumping in? He sees a decline down to the "1,290 to 1,320 region sometime in the first part of March" and thinks this would be a "good opportunity to once again raise equity exposure."

"Trendline support, off the lows since October, comes in at 1,309 when projecting out about three weeks," he explains. "A 38.2% retracement of the rally since mid-December targets the 1,296 level. A mild 23.6% retracement of the current bull market that started in October also comes in near this level. The rising 50-day exponential moving average sits at 1,289 and many times, this average acts like support during intermediate- and long-term uptrends."

Below the 1300 level, Arbeter sees "pretty thick" chart support all the way down to around 1265, and as a result, he doesn't expect a drop down that far.

As for what sectors may come under selling pressure, it's likely that the leaders of 2012, which in many cases have been 2011's biggest losers, such as

Bank of America

(BAC) - Get Bank of America Corp Report


First Solar

(FSLR) - Get First Solar, Inc. Report

, and


(NFLX) - Get Netflix, Inc. Report

, will take some hits.

Arbeter, however, singled out a more beloved name:


(AAPL) - Get Apple Inc. Report

. He said the information technology sector is "extremely overbought" and lowered the firm's technical opinion of the group to neutral from bullish.

"Apple is a big part of this sector and the stock has gone parabolic and is closing in on a key century mark (500), which we think may represent psychological resistance, at the very least," he writes. "We see the potential for profit taking in the sector as strong support sits at 430 or about 7% below current prices."

Apple shares reached a new high of $497.60 on Friday, and the stock didn't succumb to the broad market's weakness, trading up 25 cents to $493.42 on volume of 22/5 million, more than the issue's trailing three-month daily average of 12.6 million.

The S&P 500 finished Friday at 1342.64, down 0.7% for the day, and it closed with a loss on the week for the first time this year, pulling back less than 2 points. Overall, the index is now up 6.8% on the price basis for the year. The Dow closed Friday down 89 points at 12,801, and the Nasdaq finished at 2904, losing 23 points.

The best performing sectors in the S&P 500 have been information technology, financials, and materials, which were up 12.6%, 13%, and 12.7% respectively through Thursday. The worst performers have been telecom services and utilities, off 2.2% and 3.3% respectively.

Year-to-date, the best individual performers in the index have been Netflix, up 80%;

Sears Holdings


, rising 52%; and Bank of America, soaring 47%; The worst stocks have been

Frontier Communications

(FTR) - Get Frontier Communications Corp. Report

, down 20%;



, off 18%; and

Cabot Oil & Gas

(COG) - Get Cabot Oil & Gas Corporation Report

, losing 14%.


Written by Michael Baron in New York.

>To contact the writer of this article, click here:

Michael Baron


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.