Market Update: Indicators Flashing 'Risk Off' But The Real Test Is Next Week

[First appeared on Seeking Alpha on June 3, 2012]

The market reached a multi-month low on Friday following the weak jobs report. The S&P 500 closed at 1,278, corresponding to 128 on the SPDR S&P 500 ETF (SPY), representing a 10% decline from its recent highs. The narrative has now shifted to fears of a European crisis, especially the potential for Greece's exit from the Euro and problems with the Spanish banking system, as well as slower growth in the U.S., Europe, China and other parts of the world.

We start this update with a review of the market's 10% decline from its April high to Friday's close. Then we will review our weekly "Risk On / Risk Off" indicators before discussing the bull and bear cases for the market and our investment plan.

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