What:  We will remain neutral for now.

Why:  The upside reversal after some early selling pressure yesterday took us out of the remainder of the bearish bias that was initiated due to excessive sentiment readings and breakdowns from prior support levels.  We haven't gotten too much of a bounce yet from the "oversold, on support, in an uptrend" conditions earlier this week, which is a bit troubling but as long as we hold support they could still kick in.  There is a slight negative bias after we see a positive FOMC reaction and gap up opening like we're getting today, and seasonality is questionable.  Overall, it's a pretty mixed picture in the short-term.  We'd give the benefit of the doubt to more upside, but don't have enough conviction for an official change in outlook.

What:  We will turn Neutral if the S&P 500 closes above 1117.

Why:  In March, we discussed a large number of reasons to expect an imminent rally of one to three months' duration, or perhaps even more.  The rally exceeded all expectations.  On January 8th, the Dumb Money Confidence hit 75%, and every time we've seen this kind of extreme in the past 15 years, any further short-term strength (over 2-4 weeks) was reversed longer-term (over 1-3 months).  We expect the same this time around, so it was a matter of waiting for price action to crack a little.  We're getting some conflicting studies about whether the price action last week is a sign of a larger trend change, so more than anything we want to see how any bounce from short-term oversold conditions plays out.  A bounce, then move under December's low (around 1090) will bring the intermediate-term trend into question.