This week's SPY update presents a dramatically more bullish scenario median than we've seen in months. The crash scenario has disappeared and the odds look skewed about 80/20 in favor of the bulls. We shall see. Last week's bearish mean forecast was clearly off the mark (see the previous brackets on the chart) and the current low volume milieu tends to distort underlying sentiment. Best to say we have a reluctance to buy and a reluctance to sell.
Meanwhile the VIX has also developed a neutral forecast, which is not at all in sync with the bullish SPY outlook.
How this divergence will be resolved remains to be seen but we still believe May could be the time to favor cash this year and only play the highest odds directional setups or a delta neutral stance..
