July’s options expiration Friday off to an negative start. Stocks trading sharply lower with terrible breadth, and VIX spiking. Back to 2/3 handles on the 10/30 year Treasuries.
Possible catalysts: weak (but not that weak IMO) retail sales data, very poor consumer sentiment data, and my personal choice, disappointing bank earnings.
The mini-rally, as we anticipated, stalled out at the top of the trend channel and is heading back down. Look for the SPX to return to the 1,000 area near term. The economic data isn’t all terrible and earnings aren’t so bad, but there is enough weakness to warrant being defensive. I’m looking for firmer support before initiating new long positions, and considering exiting trades and hedging longer term holdings at this stage.