In the absence of new bad news the path of least resistance seems to be higher. According to Sentimentrader.com the final stretch heading into the July 4 holiday was negative only 3 times since 1990. Bonds had an excellent quarter while stocks have fared poorly. Therefore any quarter end rebalancing should be in favor of stocks at the expense of bonds.
In the bigger picture it seems that the market is waiting for more clarity one way or the other on how bad this slowdown will get. Until then we likely are in a trading range with neither the bulls or bears wanting to press their luck. Analysts are currently estimating $105 in earnings for the S&P 500. I believe the market is pricing in $95 in earnings, which would amount to 14 times earnings. The risk in earnings is clearly to the downside but there is a large cushion in terms of valuation.