Lions, Tigers, & Bears Oh My! What To Do?

Last week the S&P 500 declined 3.1%.  This decline also resulted in a close below the 200 SMA, but the S&P 500 also just barely closed within its expected trading range of 1273 and 1,363 (still statistically normal).  The constant negative economic news out of Europe and a poor jobs report seems to have pushed many investors to sell (in my opinion - early).   Although it doesn't appear probable, signals are indicating that we are likely to see a short term rebound by the market.  I am convinced that Europe is going to do everything it can to try and assure everyone that the system is not going to collapse.  I don't know what rabbit they are going to pull out of the hat next; but I am convinced that they will, and it will initially be successful at kicking the can along a little more.  I expect that eventually there will also be somethings offered along the lines of cross border deposit guarantees that will bolster those beliefs.  =

Based on the "Sentiment" signal in Chart 1 below, it suggests that it is still too early to sell, and one should wait until the first "Tentative Sell" signal indicates.  As displayed in Chart 1 below, the slope of the long term signal appears to suggest that we could see the first "Tentative Sell" signals as early as mid June.  However, the intermediate signal appears to be at a possible inflection point indicating that the probability of a short term market rebound is likely.

The expected weekly trading range, for the week of June 4th, 2012, as shown in Chart 2 below, is between 1,234 and 1,322 (or +/- 3.47%).

Chart 1: 06/01/2012 S&P 500 Sentiment

Chart 2: 06/04/2012 S&P 500 Expected Weekly Trading Range