Those who have held, over the last few weeks, were vindicated with a 1.8% market gain last week. However, I expect that as long as the intermediate sentiment signal line (blue line in Chart 1) remains below zero, market corrections will be likely. On the other hand, the long term sentiment signal (green line Chart 1) is indicating that market bulls will continue to reign. This indication is bolstered by the fact that US bond rates remain at record lows. Until there is a flight from US bonds (gradual or sudden) US equities should continue to benefit from low interest rates and a lack of other investments that can provide liquidity, diversification, and returns like stocks. The expected trading range this week is +/- 3.56 % or 1,353 to 1,453 as shown in Chart 2.
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| Chart 1: S&P 500 4/27/2012 Sentiment |
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| Chart 2: S&P 500 4/30/2012 Weekly Expected Trading Range |
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