Summary: Neutral-Bearish

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Subtle signs of an oversold market have emerged as the major indices continue to trend lower. Much attention has focused on head and shoulders topping patterns in DIA and SPY; lower highs and declining relative strength underscore the downtrend. Put/Call 5-day EMA has closed above 1.0. Commodities have firmed (albeit for a couple of days, although their 50% correction of gains from March could suggest a favorable risk/reward for longs) as the dollar weakens.Oversold readings in stocks over their 50-day moving averages are a contrary positive. Our initial downside target in SPX is anothr 5-6% loss (to the 840-850 area).We believe the uptrend will continue once such support is reached.