In summary, we expect that this correction will magnify, even if it is short-lived. We say this despite the seemingly optimistic snap-back rally today (November 8). Today’s rally seems to be spurred by the unemployment report, and by bottom-fishers. But we expect selling to return next week. A probe below support at 1730 would likely cause SPX to test the 1700-1710 area. That would certainly cuase some consternation amongst the recently complacent bullish community. But unless the term structure of the VIX futures turns negative, this is likely just a correction and not the beginning of a bear market.
I generally find Mark's views insightful and see nothing wrong with buying fairly cheap U.S. large caps. But this is advice, not Ned Davis Research's (the firm has a more positive view on equities). I do not believe that the indicator is flashing a red 'SELL' signal. Actually, I believe that the indicator is likely to fall back into safer territory in the coming months even in the absence of market declines: