Risk Level:  5

Summary:  Like we saw on so many days last spring, last fall and again earlier this year, the market continues to shrug off a host of short-term negatives, much of it in the form of gap up openings.

I'm not going to devolve this into a discussion of the various conspiracy theories that could account for this kind of activity, but suffice it to say that's its historically unusual, and essentially unprecedented prior to 2010.

It's really very frustrating - we discussed some compelling bullish intermediate-term studies after the mid-March mini-panic, but there were just as compelling reasons to expect some kind of re-test of the low that would set up a better risk/return profile.  Those reasons haven't panned out, so not only has there been a lack of opportunity to commit longer-term capital in a rational way, the market has gone against very consistent short-term biases for the past week and a half making short-term trades unreliable.

I sent out a Data Brief yesterday about the huge drop in bears in the Investor's Intelligence survey.  We're also seeing another surge in the OEX Open Interest Ratio (see below).  Combined with the jump in bullishness among Rydex traders, the next 1-3 months are looking a little less shiny, even with the multiple buy signals we've seen from some of the breadth indicators.

Short-term, we seem to be in another one of those pockets where it simply won't matter, but the Equity-Only Call/Put Ratio on the ISE exchange shows that traders bought 300 call options for every 100 put options on Wednesday.  That has been met or exceeded only 7 other times in the past five years.  After the others, the market's short-term upside was capped, with no more than a +0.6% gain in the S&P at its best point during the next three sessions (except for one instance in early December of last year).

Risk Level:  5