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

Why:  Yesterday, the S&P 500 SPDR (SPY) closed at a one-month high with a one-month low in volume, something that hasn't been a good sign in the past.  When that's happened before, it suffered a lower close within a week 85% of the time (47 out of 55 occurrences).  There were 6 that happened in August, and all 6 had a lower close within 2 days.  There were 3 that occurred the day before a FOMC decision, none of which led to any kind of runaway upside (11/15/99, 8/21/00 and 11/5/02).  Surely, a big reason for the exceptionally low volume yesterday was the pending FOMC interest rate decision this afternoon, and we're already seeing some weakness ahead of it.  Interestingly, there have only been 6 times that the S&P 500 futures gapped down at least -0.5% on the morning of a scheduled FOMC decision, as they are indicated to do this morning.  All 6 times, it marked a short-term low.  Three days later, the S&P was positive, averaging a return of +3.2% (the dates were 6/26/02, 8/13/02, 9/24/02, 1/29/03, 9/16/08 and 3/18/09) .  So the ultra-low-volume advance to a multi-month high is usually not a good thing, but we'll really have to wait to see the reaction to the FOMC decision before we can get any kind of a feel for how the coming days are most likely to play out.  Any major change in their statement could (and should) send stocks 1%-3% away from current prices.

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.