What:  We will remain Neutral for now.

Why:  Despite the past two days of selling pressure, most of our shorter-term indicators haven't become all that more extreme.  In fact, the STEM.MR Model actually rose into neutral yesterday while the market sold off.  The fact that we didn't get a bounce off the initial oversold reading, and instead moved to a new multi-month closing low in the S&P 500, is not healthy behavior.  In solid markets, oversold readings in that model tend to lead to quick and meaningful bounces.  In weak markets, we get flat to declining prices, and that kind of behavior is often an excellent warning sign that the trend is changing.  The fact that we're seeing that now is not at all encouraging for the bull case, especially in light of the failure to take out the 1105 resistance late last week with so many supporting factors at the time.  For the very short-term, there are a couple of signs pointing higher.  Of the 9 times the S&P dropped at least -1% on Payroll day and the day after, it bounced higher on Tuesday 7 times, averaging +0.8%.  We also got short-term relief after consecutive extreme days in the Nasdaq Arms Index (see below).  However, both patterns gave a bullish edge for one day only - the days following were quite negative.  We had some extremely compelling reasons to be bullish last week, and things were unfolding well.  The window for an intermediate-term low is still (barely) open, but the past two days have put a huge damper on it, and we'll have to wait for either better price performance, or another round of extremes, before becoming positive again.

What:  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, so we will have to wait for either better price recovery or another round of extreme conditions to become bullish again.