What:  We will remain Neutral for now.

Why:  It's rare that a day goes by without something related to equities to discuss, but today is one of those times.  Nothing I've looked at over the past day has turned up any edge in any time frame, and none of our indicators moved to a notable extreme from the prior day.  The intermediate-term studies we've looked at over the past couple of weeks remain in effect, and continue to point to higher prices as the most likely outcome.  The two most recent - the give-up by Rydex traders and small options traders - are just as bullish as the ones we looked at near the depths of the decline.  The short-term, though, has been a mixed mess as the S&P 500 continues to gyrate within a month-long trading range.  Range trading can be excellent for short-term traders because the market often responds well to overbought and oversold extremes, but even there our indicators aren't giving any kind of compelling readings.  I mentioned yesterday that even with the longer-term positives in place, for the short-term a large gap up open...after consecutive up days...on a Monday wasn't my idea of a low-risk, high-probability long trade, and we ended up fading hard from that 1105 resistance area yet again.  So I still see no edge as we muddle along here.

What:  We will move back to Neutral if the S&P 500 cash index trades below 1040.

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.  But since we have seen a lot of give-up among Rydex traders and small options traders, and the S&P made another go at a breakout above minor resistance (at 1080), we're willing to give the bullish outlook another shot.