Today's Update:  If the S&P 500 e-mini futures are between 1100-1105 at 4pm EST, we will move to 25% Bullish.

Why:  Despite all the sound and fury yesterday, there really isn't much that has changed in the past week.  The S&P 500 has closed within a 4-point range over the past five days, from 1113 - 1117.  That kind of meandering price action is not conducive to triggering sentiment extremes, and it hasn't.  Most of our indicators have been busy making their way back to neutral instead of moving to new extremes.  Yesterday's afternoon selling was enough to move a couple of our shortest-term guides into oversold territory just as the major equity indexes come back to test the potential support area that marked their upside breakout last week.  The best setup for a bounce would be another very mild day of selling pressure today, which would lead us into the typical FOMC-day rally (see below).  Yesterday's kind of reversal has not necessarily been a great sell signal (see below), so other than the very short-term it shouldn't influence events too much.  Bottom line, I'm still not seeing a huge edge in the short-term, which has been the case as the S&P has chopped around in this tight range, but if we can settle slightly lower heading into Wednesday it may pay to look for the typical rally.

Today's Update:  We will move back to Neutral if the S&P 500 cash index trades below 1103.

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 resistance, we're willing to give the bullish outlook another shot.