The stock market remains mired in a trading range, in which it is likely to stay in the near term, especially as funds that utilize computerized trading programs work to keep those ranges in play. But it’s noteworthy that, as we move further into May, we’re entering into a historically weaker season for the market between the end of April and November.

Looking at market’s performance over the past seven years or so, the old bull market appears to be losing steam, which suggests that it is probably due for some downside action at some point during the next few months.

If we’re going to get a correction of any kind, the stage is set for it to come in the next few months. It could potentially stem from a black-swan type of event, which means it may be worse than a simple correction. While any number of geopolitical events could be the catalysts, quite simply there are signs that the U.S. economy isn’t as strong as many would like to believe.

But beyond history and conjecture, we are starting to see some cracks appear in the major indices, as the Russell 2000 — via the Russell 2000 ETF (IWM) — and the Dow Jones Transportation Average (DJT) have broken below their extended uptrends. The Transportation index is very important because it is usually a leading indicator of the overall stock market. It doesn’t mean either index or the market is going to go down right away, but it does indicate a change in their trends.

Our internal indicators also seem to be foreshadowing the impending pullback, as they have turned overwhelmingly bearish. Of course, as options traders, this represents opportunity for trading puts and other bearish options strategies, but given that all investors should have broader portfolios of stocks, ETFs, bonds and the like, it could impact longer-term holdings.

While gold — via the SPDR Gold Trust ETF (GLD) — is still holding up above the $110 level, propped up by, I suspect, Russia and China’s covert purchasing programs, my feeling is that if a big selloff occurs, gold will likely take a hit, as well.

The outlook for oil (USO) is looking bullish, as prices broke above overhead resistance. Oil pulled back on Thursday, but it remains above the overhead resistance level, so I think it’s likely to go higher, at least in the very short term.

Despite signals that a selloff is setting up, within the current range-bound stock market, my outlook is neutral to bearish. However, it makes sense to lean more toward bearish positions in your portfolio and reduce your exposure to bullish trades. June is typically is not a good month for the stock market, nor is September, so plan to incorporate longer-term bearish positions in your holdings this summer.

For now, I have a shorter-term bear play in International Paper (IP), which is showing technical weakness that we can exploit with put options as the stock market declines.

Buy the International Paper (IP) Jul 50 Puts (IP150717P00050000) at $1.30 or lower. After entry, take profits if the stock price hits $49.30 or the option price hits $2.50. Exit if the stock price closes above $53.40.

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A note on last week’s Apache (APA) trade, the company reported a quarterly loss, and the stock closed below the stop loss. Be sure to exercise discipline and exit the position. As noted above, the landscape is getting more bearish, which doesn’t mean you should abandon bullish plays all together, but it does mean you should keep your positions small and limit exposure.