In his latest strategy note Jeff Saut points out the overwhelming evidence that points to further downside in the long-term, however, he also says we have reached an extreme in the short-term.  Saut believes we could rally from here, however, he appears to remain quite bearish in the longer-term:

“Since the “flash crash” low of May 6, 2010, we have had a Dow Theory “sell signal” (5-20-10), a sell-signal from my proprietary intermediate trading indicator (the first since December 2007), the monthly stochastic-indicator has turned negative, a downside violation of the 12-month moving average has occurred, most indices have broken below spread triple-bottoms in the charts, and last week we got a “death cross” when the S&P 500’s 50-day moving average (DMA) crossed below its 200-DMA. All of this suggests that a cautious stance on stocks is warranted. Indeed, of all the vehicles I monitor, only the Yen, Gold, Silver, and Fixed Income are higher for the month of June, the 2Q10, and year-to-date. That said, such extreme downside readings typically imply stocks have been too compressed on a short-term basis and consequently a rally may be in order.”

Source: Raymond James