The S&P 500 is still stuck in its sideways trend:
Notice the decrease in volume as the S&P approached the top trendline – this is a good indication that investors are still worried about Europe’s banking crisis and are not willing to take additional risk in this market.
However, I think a contrarian strategy needs to be looked at. More and more investors are shorting the market as they expect the current trend to continue. (To cover their shorts, these investors need to buy back their positions). Any good news from Europe, or strong earnings from corporations this week, could spoke investors who are short, leading to a powerful stock market rally – and perhaps a long awaited break from this trend.