- A rally in the next few weeks that gets the crowd bullish again would be a good setup on the short side.
- A nasty decline into the Fall would likely set up a year end rally.
- A pullback early next week might setup a short term rally into the turn of the month.
The Dance Continues
On the one hand we have worsening economic data and a deteriorating profit picture. On the other we have a market that does not seem ready to go down. I believe the market will go higher before eventually reversing lower into the Fall. However, the economic deterioration is serious enough to keep me on the sidelines and stopping me from betting aggressively on further upside. A better risk/reward profile would emerge if any of the following happen: