Perhaps the most likely explanation for the rebound in stock prices so far this week is that sentiment has turned too bearish and that the market was oversold and due for a bounce. Yesterday, it was reported that the Bull/Bear Ratio (BBR) fell to 0.87 this week. That’s the fifth straight weekly decline to the lowest reading since August 2010. Stocks have often rallied following such low readings. Our Fundamental Stock Market Indicator (FSMI), which has been highly correlated with the S&P 500 since 2000, has declined for four of the past five weeks since early August through the week of September 3 by 5.4%. At its low on August 8, the S&P 500 was down 13.4% from the end of July and trading at a 29-month low of 13.2% below its 200-day moving average. Yesterday, the S&P 500 closed 7.6% below its 200-dma. There may be some more upside in the near term given the low reading of the BBR.