The market action after the bad employment report on Friday is not something that fits in my new bull leg scenario. Also, one indicator I watch for breadth, the 13 day EMA of TRIN, dropped unusually fast on Monday's sell off (the scale is inverted), a behavior uncommon to bull legs.
Adding yesterday's very weak close made me change my short term outlook. I am expecting a drop in the next weeks to the SPX 1260-80 zone, before any significant upside. This way the market may continue to play the range-bound theme and look similar to the range in 1991, after the big 30% + rally that started in 1990.
This market weakness fits the anticipation of a weak Q2 GDP report at the end of the month, as well as probably a not too good earnings season.
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