What:  We will remain Neutral for now.

Why:  Traders have been conditioned to automatically buy each and every dip lately, whether the data supports that view or not, and the vast majority of time they've been rewarded for doing so.  This time, they actually have quite a bit of historical backing.  13 out of the last 14 times the S&P dropped the day before a FOMC meeting, it rose the day of (though two days after the meeting, it was up only 2 out of the 14 times).  9 out of 10 times the VIX jumped 20% or more while it was relatively close to its 52-week low, the S&P 500 was higher the next day.  When the NYSE Arms Index closed above 3.0, the S&P 500 SPDR (SPY) has risen the next day 76% of the time.  Any time we see a big move like yesterday, the natural reflex is to look for a bounce, and we usually get it...especially when it immediately precedes a major news event like the FOMC meeting.  So I do expect a choppy move higher into the afternoon, but we are of course still subject to headline risk from the Euro zone and the statement from the FOMC about their future intentions with monetary policy.  It does not seem to be one of those times to "buy 'em and forget 'em" due to the likely volatility.  We *should* have a generally higher bias for the very short-term, but I think it makes a lot of sense to stay on top of all positions in case the wrong headline happens to cross the wires.  If we do get a smallish rally today (not moving us above 1200 on the S&P) that relieves some of these oversold conditions, then we should have another move down in the day(s) ahead.

What:  We will remain Neutral for now.

Why:  In early January, the Dumb Money Confidence hit 75%, which was another successful "protect your gains" warning sign.  By early February, we went over several studies suggesting we were very close to a good multi-week buy signal, but they just missed triggering.  In the process, there have been some more encouraging signs (such as no overwhelming number of signs that we have seen a major market peak, the advance/decline line at a new all-time high and extreme momentum in small-cap stocks).  The spread between the Smart Money and Dumb Money has moved beyond -40%, the largest negative spread since early 2007, so there are some definite intermediate-term warning signs.  We've been waiting since then for either a surge in speculative activity, or waning momentum.  We got the former, with a surge to 75% in the Dumb Money.  But the price momentum has been historic, which usually means even higher prices during the months ahead, and we have not seen any evidence of it waning yet, so it still appears way too early to bet against this recovery on a multi-week or multi-month time frame.