Any stock market rally during the next few days has nothing to do with an improving economy. As a result, most investors and flock traders are becoming fearless and optimistic, adding to their equity positions simply because they are feeling good about the market again and emotionally it is a lot easier to follow the crowd rather than logic.

It appears that the S&P 500 is forming a topping pattern in the low 1400s. Anyone who tries to chase after a trend, identify breakouts in either direction, or tries to invest based upon long-term fundamentals, is going to be rudely disappointed in the near future. Be very alert and consider selling now even though you may not be making a profit.

In case stocks have any additional false spikes upward, we will add to our short ETF at favorable prices. These intraday spikes will really confuse the day traders, chartists, momentum investors, and high frequency traders.

Eventually as the prices of our focus equity ETFs reach compelling low levels, we will start buying them again. This will happen at some point during the next few months. In our opinion that will be the final rally for this year.