What:  We will move to Neutral with a trade above 1106 in the S&P 500 cash index, or a drop to 1085 or below that then reverses up more than 5 points.

Why:  The market has done well lately just ahead of FOMC decisions, which is a minor positive for this morning.  More pressing are the multiple extremes that have generated since Friday, all of which argue for higher prices (short-term only).  Yesterday's bounce attempt was extremely feeble, we we'd need to more impressive breadth and a breakout of 1100 for a chance at a move back to 1115-1125.  There is a big wave of news hitting today, so we won't be making any big changes in outlook until they're past and the smoke clears a bit.  With a big drop after the FOMC announcement, there could be an opportunity on the long side (the "Fed Reversal" pattern), but we'll have to revisit that tomorrow morning if it occurs.

What:  We will turn Neutral if the S&P 500 closes above 1136.

Why:  In March, we discussed a large number of reasons to expect an imminent rally of one to three months' duration, or perhaps even more.  The rally exceeded all expectations.  On January 8th, the Dumb Money Confidence hit 75%, and every time we've seen this kind of extreme in the past 15 years, any further short-term strength (over 2-4 weeks) was reversed longer-term (over 1-3 months).  We expect the same this time around, so it was a matter of waiting for price action to crack a little.  We're getting some conflicting studies about whether the price action the past few days is a sign of a larger trend change, so more than anything we want to see how any bounce from short-term oversold conditions plays out.  A bounce, then move under December's low (around 1090) will bring the intermediate-term trend into question.