I can make both bullish and bearish arguments for the coming week. At minimum, I generally hold a weak opinion of market direction coming into a new week but I see no edge either way this week. If we sell of for the first half of the week it would set up a long trade for a quarter end bounce. If that fails we would be oversold early next week so their would be a second out for a bullish trade.

The bear case for the coming week is that the market is still short term overbought and will not be oversold until early next week. In the past few summers it has taken a fully oversold market in order to get a rally. Furthermore, nasty down days like last Thursday tend to have some follow through after a bounce.

The bull case is that the market is still oversold in the intermediate term. On the first down day everybody suddenly turns into a grizzly bear well versed in why we are all doomed. Equity allocations are low and valuations are reasonable. We are headed into the end of the quarter so its possible we see some turn of the quarter strength.

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