Update on the Context

Context is very important in trading. The value of the same setup ranges from useless to pure gold depending on the context. So here is a short update on the context I am currently trading in:

- The stock market has seen the first leg of a bear market from the 1220 top in April to the 1011 low in June (SPX values). Here is why.

- An intermediate-term bear market rally started in July and hasn't ended yet. Here is why I expected this rally to continue this autumn.

- The economy is ready for another "leg down". Here is some perspective.

Given all this, I do not have bullish long term exposure to the stock market and I am ready to take bearish long term exposure as soon as the bear market rally becomes overbought - I think we are about one month away from that event.

I am also on the look-out for evidence that would negate my views. Such evidence could be more economic strength than expected (like this series reaching the blue line), or healthier market breadth (this series breaking above the upper red line - the chart is not updated. I will update it tomorrow as it has significance for next week's trading).