I am not trying to make a prediction with the above possibility merely pointing out (mainly to clients) that another whoosh down is very plausible. We've had all these whooshes with out dramatic changes in the fundamentals in the US. I would say the fundamentals in Europe are changing a little quicker but I think it is correct to say that Europe is the same story and we are living through the deterioration at this point.
Last we I said something very similar while also noting that I think the upper and lower ends of the range are moving up slightly. Where the last one peaked at SPX 1275 maybe this one will peak 10 or 15 points higher as an example and where the intermediate bottom last week was 1158 maybe the next bottom will be something like 1170 as an example. Maybe we churn in that manner up near the May high of 1363 which then becomes the real test for the market to which I would lean bearish. If this plays out I think it would take months and to repeat, sentiment would swing from glee to despair every couple of weeks or so.
One reader has commented a few times about hating this market but going along for the ride, I suspect he would really hate the above scenario.
To be clear this not a description of a healthy market. The market can get healthy again in any number of ways but it appears to be a long way from there now. If this has changed somehow we are decently long such that we should continue to participate which is philosophically where we want to be; smoothing out the ride if possible not being completely out.