Today's Update:  If the S&P 500 e-mini futures trade at 1085 prior to 10:30am EST, we will move to 25% Bullish.  We would move back to Neutral with a subsequent trade under 1074.

Why:  There were a couple of reasons to look for some selling pressure yesterday, namely the seasonality ahead of prior FOMC decisions and price reversal from Monday, which is the kind of thing that has led to some mild short-term follow-though selling in the past.  But in the process, the S&P sliced right through its former breakout level around 1105, which obviously isn't a great sign.  Ideally, that area would have held or just been slightly violated heading into the FOMC decision day, which has a solidly positive bias, with nearly 90% of these days showing a positive return over the past couple of years.  When we add in extremes like yesterday's spike in the Arms Index (see below), then the chances for a rebound seem even more impressive.  In the past when we've seen a spike in the Arms Index just prior to a FOMC day, every time the S&P rallied for two days...and then fell after that.  We'll have to see how the first part pans out, but for now we'll be looking for a chance to trade the idea of at least a 1-2 day rally, preferably with some early weakness today though with the futures up several points that doesn't look likely.

Today's Update:  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.  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 were willing to give the bullish outlook another shot.  On June 22nd the S&P fell back under its breakout level, so we're going to stand aside and see if it was "fake", or an ominous sign of a lack of buying interest.