Today's Update:  If the S&P e-mini futures open regular trading hours below 1077 and subsequently trade above 1080, we will turn 25% Bullish.  We will move back to Neutral with a subsequent trade below 1069.  We will also turn 25% Bullish if they fall to 1060 during the day, with a "return to Neutral" trade at 1049.

Why:  Wednesday's selling pressure triggered a number of quick oversold readings among the most sensitive indicators we follow, but due to it being the first thrust out of a week-long consolidation pattern, it seemed more likely that we would witness even more selling pressure.  We got a bunch of that right away yesterday morning, but buyers managed to show some gumption and steady the market during the day.  That price pattern is relatively bullish in the very short-term, and we were on track to get a decent upside gap this morning, but there has once again been heavy selling since Europe opened, with the S&P down more than 13 points over the past several hours.  Another potential negative is a bearish technical signal called the Hindenburg Omen, which is making the round (see below).  While not an immediate threat, the market has indeed struggled in the past when those specific technical criteria were met.  On the bright side, the S&P has suffered three straight days with unfilled opening downside gaps (where we gap down and don't trade above the prior day's close).  That's only the third time we've seen that in the history of the S&P SPDR (SPY).  The other two were 12/11/97 and 7/6/01.  Using the futures, 8/6/90 and 7/5/96 also popped up.  All of them were at/near short-term downside exhaustion points.  Another blip lower today, I suspect we'll see the same thing here.

Today's Update:  We will remain Neutral for now.

Why:  In late May, we 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.  But after just a brief respite, June 4th's Payroll Report kneecapped the rally attempt and took us to a new closing low.  In the process, we saw very oversold conditions and some give-up among Rydex traders and individual investors.  In early July, we saw even more evidence of excessive pessimism.  The big missing piece, though, was the price action - the S&P was making a clear series of lower highs and lower lows, which muddled the risk/reward of stepping in and buying into those pessimistic conditions.  The market has obviously recovered well from there, and with the advance/decline line making a new all-time high, things were looking brighter for stocks.  But August 11th's knock-down gave us the potential for a failed break of important resistance, and we're back to being stuck in a longer-term trading range.