What:  We will remain Neutral for now.

Why:  On Friday we took a look at a study that was not at all kind to the market going forward.  When we had back-to-back up days for the first time in at least a month, the market performed quite poorly going forward.  But considering everything else we've discussed over the past week or so, the weight of the evidence seemed to still suggest that stocks should be able to make it over that 1105 resistance area.  So Friday was a shocker - not only did the S&P 500 fail right at resistance, but it did so with prejudice, taking us to a new closing low.  Clearly the initial cause was the Payroll report, and Friday's gap down was the largest negative open on a Payroll report day.  It also ended up being the largest daily loss.  There were two times the S&P lost -3% or more on a Payroll day (01/05/01 and 06/06/08), and the index mostly chopped for the next week, without any clear directional bias.  Whenever we see a bad Payroll report day and then additional weakness on Monday and/or Tuesday, it has usually been a good spot to look for a multi-day reversal, but the futures have already recovered after significant early weakness.  The close at a new low on Friday severely dampens many of the bullish studies we've discussed lately, and a gap up on a Monday morning isn't exactly always a great sign.  I do think it's likely that we repair some of the damage done on Friday, but the overall positive outlook has taken a big hit.

What:  We will remain Neutral for now.

Why:  On April 15th, the Dumb Money pushed up to 75%, and the spread between that and the Smart Money reached to -45%.  In addition, we got a tremendous surge in the number of bearish (for the market) Indicators At Extremes.  After we got the expected weakness and volatility exploded higher, we experienced a very unusual situation with the "shock day" on May 6th.  We looked at somewhat similar days on May 7th, and the conclusions were clear - a short-term rally was likely, probably being capped at a 62% retracement of the crash, then a re-test of the panic lows.   Since late May, we've looked at quite a few  bullish intermediate-term studies - we got a major surge in pessimism, then several positive breadth thrusts and positive price performance, all in the context of an ongoing bull market.  That has led to consistent and significant gains when looking over the next 2 weeks to 1 month.  However, June 4th's Payroll Report kneecapped the nascent rally attempt and took us to a new closing low.  That is very unusual given the studies we discussed and cannot be dismissed, so we will have to wait for either better price recovery or another round of extreme conditions to become bullish again.