Today's Update:  We will remain Neutral.

Why:  Yesterday, we didn't see much of a challenge by the technical support at 1065 on the S&P.  We gapped below, and never threatened to overtake it.  The selling pressure was heavy again, and volume was surprisingly high, given that we normally see some of the lowest volume of the year around this time.  There isn't much technically to point to that's positive, except maybe some kinda-sorta support at 1040ish, then obviously the July low around 1020.  But support in a downtrend is an iffy proposition - I still consider the market to be in a bull market environment, but we're getting close to violating that idea.  There are an increasing number of oversold signals, as to be expected after four straight down days and a poke below support.  When the S&P has had four down days in a row then gaps down the next morning, it has led to a short-term reprieve about 65% of the time.  When its 200-day average was rising at the time (as it still is) then the win rate bumped up to 70%-75% depending on whether you look 2 or 3 days forward.  So perhaps a gap down towards 1040 will be enough to trigger some snapback buying, but it's a fairly flimsy setup and we'd really need to see that support hold.

Current S&P futures:  -3 points at 1047

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Sentiment ():  Some oversold guides

Trend ():  Stuck in a trading range

Support/Resistance ():  1040/1100

Other ():  Nothing notable

Today's Update:  We will remain Neutral.

Why:  During the market's breakdown in early July, we saw a number of examples of excessive pessimism, such as deeply oversold conditions, and give-up among Rydex traders and individual investors.  After sentiment recovered from that during a 10% rally, we saw some encouraging signs, such as the advance/decline line making a new all-time high.  But indexes like the S&P 500 remained mired in a pattern of lower highs and lower lows, so price action was dubious.  Since then, we saw some worrisome signs, some of which the media has grabbed onto, like the Hindenburg Omen.  Now stocks are threatening to break down under support.  There is anecdotal evidence of too much pessimism once again (mainstream press about mutual fund flows into bonds instead of stocks, firms rolling out "fat tail" funds, and celebrities warning about pending market crashes and advising the masses to stay away from stocks).  Lately, some of our indicators have started to reflect that, including a dearth of money in leveraged long funds at Rydex and investors clamoring for "fear trade" currencies.  According to our indicators, though, we're not yet at a pessimistic extreme, and given the poor price action we're not eager to add exposure.

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Sentiment ():  Mostly neutral

Trend ():  Mixed int-term trend

Support/Resistance ():  1040/1140