Terence Chan's  Instablog

"Ladies and gentlemen, to an underinvested portfolio manager the current environment is a nightmare, especially if you believe as we do that we are going to see an upside celebration into year-end. Manifestly, we have argued that with credit spreads below their pre-Lehman bankruptcy levels there should be no reason why the equity markets can’t “fill up” the downside vacuum created in the charts by said bankruptcy. As can be seen in the following chart, that gives the S&P 500 an upside target of 1200 – 1250. If correct, it implies that the cash rich, underinvested portfolio managers (PMs) will once again be forced to chase stocks higher. Our guess is the PMs will chase the “winners” since the March lows rather than buying the laggards. That suggests investments in emerging and frontier markets, technology, financials, base/precious metals, etc. should trade higher if the aforementioned scenario plays."
I don't know if a 1200-1250 target (10%-14% upside) is possible by year-end, given that the indexes are range bound, with the S&P 500 upper end of the range at about 1140-1150. As of now I'd have to assume that the ranges will be intact, but anything's possible.

I can't really see the markets zooming straight up from here without a minor consolidation/correction first, given the slowing MACD momentum and the short-term extended conditions. A break below the 65-day moving average should see the our chances for a year-end rally go up in smokes. But judging by recent market action, it looks like we're going to have one. I

In conclusion, I'd suggest refraining from shorting aggressively (I've already been proven wrong shorting this rally and my model portfolio has underperformed as a result of it) despite a possible correction as this will most probably be minor and the persistent V-shaped rallies off of support levels just shows that "dip buyers" are still in control of this market. Lastly, trying to anticipate anything in this market has proven dangerous (both on the long and short side, but mostly on the short side) so I'm gonna take it one day at a time.