Going into the third quarter all eyes are on the potential head and shoulders top forming in the SPX. With the neckline near that pivotal 880 mark we should see whether or not it holds this week. If that level cracks then I think you can count on 850 coming and potentially lower in the coming months. However, there is still some underlying strength in the market so we can easily just consolidate further into July as well.
With the energy sector now joining the roll over and sell party it seems like we are headed lower in the short term. At the same time crude is selling off we have the dollar starting to bounce and that could continue for a few weeks at least, which would put pressure on stocks further.
Overall I would be tilted to the bearish side until this pullback completes or something changes. There is simply very little reason to be going long stocks at this time. But as always, there is usually a good long or two ready for a move and breakout.
Longs: CVD, IM, VPRT, WLT, JAH
Shorts: X, TOL, CMG, FCX, MAC, PAY