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

Why:  Yesterday we got a major gap up opening on the first day of the month, something that tends to lead to additional gains during the day, which it did once again.  8 of the last 9 times that the S&P futures gained +2% on the first day of the month, it added to them the next day, though prior to that the results were mixed-to-down.  And after that 2nd day, the results were also mixed-to-down.  The same goes for any plain old 2% one-day gains, even when accounting for the fact that we're still in a bull market environment and the S&P just closed at a new one-month high.  It's not just the S&P that's doing well - enough stocks have performed lately that the advance/decline line on the NYSE just hit a new all-time high (see below), which isn't a cure-all for the bulls, but it has tended to lead to higher prices more often than not, and with relatively small drawdowns.  For now, the price breakout and good breadth bodes well for stocks going forward, and we're not even all that overbought just yet.  The one potential negative is the tendency to see some back-and-forth after a big move like yesterday, but that's a relatively minor bias.  The other modest negative is what we looked at yesterday morning in terms of the one-week returns after a big gap up open on the first day of a new month.  But if the S&P can make it over this 1125ish hump, the price breakout should trump that seasonal influence.

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 are looking brighter for stocks.  The S&P still is flirting with the 1125 area, but much more upside will break the pattern of lower highs we've been mired in since the spring.