"With the market very oversold, a counter-trend bounce next week will not be a surprise. However, if the market fails to hold the 50-dma, the risk of a more substantial correction is likely."

Notably, two essential things occurred this week. The market regained its 50-dma and triggered our RIAPRO Money Flow "buy" signal. Both suggest that bulls have regained control, and we could see some follow-through buying next week.

Over the past several weeks, in various forms, we discussed our reduction in risk by rebalancing equities, raising cash, and extending our duration in our bond portfolio. To wit:

"With volatility currently at the lows of its recent range, a pick-up in volatility would not be surprising. Over the last 6-months, corrections remain range-bound to the 50-dma which is currently 3% lower than closing levels. While such a decline is well within the norms of a correction in any given market year, the low levels of volatility will make it 'feel' worse than it is.

With money flows continuing to weaken and technical indicators setting up to produce sell signals, we reduced exposure a bit more this week by increasing cash and reducing our financial holdings. " – August 13th.