Mr. Market seems to take perverse delight these days in preventing us from getting down off the fence and taking a stand in either the bull or the bear camp. Just in case he reads this update: be warned. It’s not funny any more!

Our hearts are longing to join the bearish camp. Higher interest rates are never good for stocks, and not only has the U.S. Federal Reserve’s campaign of raising rates been taken up by the EU, but now Japan is threatening to raise its rates as well. Add to that the fact that the U.S. bond market is finally showing some signs of weakening, and it’s hard to get too bullish on stocks.

On the other hand, our indicators tell us it would be wrong to get too bearish either. For example: the recent behavior of our New York Unweighted Index.

Arrrrhhhhh! Our Master Key has once again turned neutral to slightly negative, after its brief flirtation with bullishness last update. This is the longest stretch of waffling and fence-sitting on its part that we can remember. In fact, the Master Key is showing the same kind of indecision, confusion, and mental paralysis we normally expect to find in the minutes of the latest Federal Reserve meeting notes (or dare we say Congress).

Nonetheless, the market tone is not really bad. Last week, despite the volatility, there were still more gainers than losers. The majority of stocks continue to hold their own. Sentiment among the public and most market commentators (the “dumb” money) remains extremely bearish, while market specialists (the “smart” money) remain stubbornly bullish.

Who would you rather trust? Every dumb bunny is sometimes right. But we find it hard to believe the market could collapse without the smart money catching wind of it first. So even if a major advance doesn’t take place, a major decline looks highly unlikely.