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

Why:  Early last week, we went over the brewing battle between the short-term positives and negatives.  Typically when we see those kinds of conditions, we get a period of volatile swings in both directions, and we got that last week, particularly on Thursday and Friday.  We're certainly no longer overbought on a short-term basis and for now the "failed breakout" around that 1100 area on the S&P is off the table, though we still have that tough resistance around 1120ish.  Seasonality is modestly negative at this point, but as usual that is only a modest headwind and certainly no basis for a trade.  Currently, the futures are gapping up strongly, so we may be starting the week near the recent highs.  There have been 12 other times in the history of the S&P 500 futures when they gapped up at least +1% on the first day of a new month.  9 times, they ended up closing higher than the open, by an average of +0.8%.  The next week, however, was dicey - the futures showed a positive return only 33% of the time, with an average of -1.5% (two of the gains were only +0.03% and +0.68%).  If stocks play out according to that history, we should see more gains yet today (particularly if we see a higher intraday high after the first hour of trading), but if we end up closing near 1120-1125, it may be tough once again to finally get that upside breakout.

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.   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.  After a brief respite, June 4th's Payroll Report kneecapped the rally attempt and took us to a new closing low.  In the process, we've seen very oversold conditions and some give-up among Rydex traders and individual investors, so we'll be looking for the price action to improve to re-establish a bullish outlook.  That would include either a successful test of the recent lows, or a recovery high above 1100 to break the recent pattern of lower highs and lower lows in the S&P 500.