- Intermediate term sentiment is still negative. After two months of declines market participants are underinvested .
- The 10 and 30 day moving averages of the put/call ratios are still showing excess pessimism.
- On an intermediate term basis the market remains oversold
- Seasonality is positive for the next two days.
- While the economy has slowed corporate profits have not been effected. Until corporate profits are hit its unlikely we will see more than a correction.
- The market is becoming overbought on a short term basis.
- Seasonality will turn negative next week.
- Some of the recent action might be quarter end markups.
- The economy is slowing.
- Commodity prices have barely pulled back and are gaining steam. Interest rates are on the rise again.
- Austerity measures will hurt the economy in the short term.
- Eventually corporate profits will suffer.
- No mo POMO starting tomorrow. QE II ends today.
In the very short term the bear case is slightly more convincing, especially if we rally today and tomorrow. However, a pullback is likely to be shallow as the bulls have a better intermediate term case. To confuse matters even more I believe the bears have a better long term argument.