Here is what I wrote as a response to a similar question from a member:

We have always stated that this bear market rally would convince many that the bear market was over and that "glory days were here again."  Did you see the cover of Newsweek?  It proclaimed that the recession was over.  While we have yet to reach sentiment levels associated with Primary Wave highs, we are certainly seeing signs of such complacency returning (look at the VIX).  Anyway, we (nor anyone else) can say unequivocally when the top will be but we believe it's time to become more cautious (when looking at the bigger picture).  China has promoted an expansion of credit (debt) which has served to offset the declining US consumer recently BUT this too will be unsustainable as the whole world faces unparralleled deflationary pressures going forward.  We are cogizant of these facts but cannot be precise in when they will begin to impact stock prices. 

As far as investing based upon this premise, our first concern is SAFETY OF PRINCIPLE.  Specifically, we want to have our money in the safest place possible should the next wave down unfold.  Investors could profit from the decline but they have to make sure they can actually collect upon those profits should things get ugly.  Thus, you may want to concentrate on finding safe places to invest (see Goldmoney.com for one suggestion) and shorting with non-leveraged intruments.  If looking at the leveraged instuments, I would prefer to short the LONG funds as you mentioned below but only during the initial phase of the decline.

If you don't believe it, there is nothing to talk about... This is a high-end technical site for adults who can tell truth from lies and who don't believe popular hogwash. Matt and Steve already answered this question many times. They work hard to provide us with quality predictions that materialize exactly as stated. Has anybody else from your newsletter writers, including your favorite Mike Swanson, had the same record to valid predictions??

I don't know if we're starting a new bull market or not, but Mike Swanson thinks so based on a technical event that he's been anticipating, namely that many stocks and indices have been trading above their 200 dma's (and other long-term averages) for months, and that these same averages are starting to turn up.

So less sentiment and more indicator for him. But whether we're in a bull or bear market, I really don't know at this point. I guess we'll wait and see. One can profit either way by trading the shorter-term.

FWIW my understanding is that tops in bear market ralllies is when sentiment gets to a bullish extreme.  Interesting as to what Matt/Steve see here?