S&P sitting in the crosshairs

The broad market is right in the crosshairs. Crosshairs of what you ask? Well that depends on your perspective.

If you are a bull then you are seeing that the S&P is close to closing over its recent high close of 1415 and setting up for a major extension higher. This camp is talking about QE3, the effects of an election year, a resurgence of equity buying with a risk-on attitude, and looking for a 1500+ level for the futures. Yes Alice, there is a Wonderland.

If you are in the bear camp then you are seeing breadth deteriorating as the internals struggle to support a rising market. You are also talking about declining volume, a rise in the AAII bulls to its highest level since the spring (contrarian), and a return of the S&P to the low 1300's or lower. Humpty Dumpty has to fall somewhere!

Both camps have a strong leg to stand on and the argument is heating up as we head into the election. What camp you are in is a choice. One that is either forced upon you because you are fully invested in your 401K / IRA or not forced upon you because you are a "savvy" investor who  can "see" the bigger picture and knows when things are unfolding (interestingly most of us believe we are in the 2nd category but actually none of us are).

Personally I am in neither camp. Instead I see what picture the market is painting and try to decipher what it means...like an art appraiser looking at a piece of art. Is that a Pollock worth millions or is that a 5 year old throwing paint on a canvas? Sometimes the appraiser is correct and sometimes not so. But in most cases, the artwork speaks differently to different people.

So here we are - sitting in the crosshairs. To some its the beginning of a major advance, and to others a major decline. To me, its the crosshairs of a fence where we could go either way. Whats your appraisal?