There are a number of cross currents in the market at the moment that are sending mixed messages. The elliott wave pattern is ambiguous with a bullish bias. The VIX is trending down, but the Dollar is trending up. Leading stocks are no longer doing well, but some are beginning to show some buying interest. This is a typically bullish seasonal period, however, advisors are too bullish. One measure that is beginning to support a bullish outcome is the short term sentiment as measured by the equity-only put-call ratio. The PPO of the ratio is now beginning to approach levels seen at intermediate term lows. This suggests that while there may be some more testing at the current level, the next significant move will probably be to the upside as I have previously indicated.
There is one thing that bothers me though, and that is the High-Low Logic Index which reached 1.18 today. This is not a sell signal, but it is a warning as it has moved into the neutral zone. Confirmation of a buy signal would occur if it falls back below 1.00.
There has been buying interest at current levels the past two days, and there is every reason to think that next week will be positive. However, the pattern of the action suggests at least one more probe of this week's lows before wave [c] up can begin.