Earning are coming in weak, the economy is slow and there will be some sort of fiscal cliff at year end that will likely slow growth further. The only question is the size of the fiscal cliff. Combined with valuations near the historical average its difficult to be overly bullish.
Companies and private equity firms are borrowing at the lowest levels in history in order to repurchase shares and take over other companies. With yield scarce everywhere the only place left to get yield has become the stock market. In addition, we are heading into a typically strong part of the year. This makes it difficult to be overly bearish as well.
Given this backdrop it is difficult for me to have a strong view on intermediate term market direction. My best guess is that we are in some sort of range where it will pay to buy oversold and sell overbought.