· Market Update - the break-out rally of 6/15 proved to be nothing more than a head fake as momentum strong enough to push us meaningfully up and out of our trading range (1110-1050) proved fleeting; all the fast-money traders who got long last week on back of the encouraging trading patterns have turned sellers this week (Tues’ 1.6% sell-off in particular was a big momentum breaker). There were a bunch of negative data points being cited to explain the weakness, but the fact of the matter remains that large long-only money never bought into the rally that commenced back on 6/8 and we are simply drifting back into the middle of our month-long trading range. There hasn’t been a ton of big long-only sellers, but there is a big buyers strike, which is allowing the tape to fall lower. Volumes were on the light side and there hasn’t been a lot of panicked selling. Fundamentally, some of the items cited to explain the weakness: 1) fin reg reform proving more draconian than even reduced expectations (esp. the FNM/FRE items discussed on Politico overnight); 2) slew of neg. consumer discretionary headlines (BBBY, NKE, DRI today, BBY last week, etc); 3) cautious comments out of tech (inc. DELL’s commentary today at its analyst meeting that Europe + consumer has moderated some); 4) increased concerns out of Europe (in particular the dramatic widening of Greek sov debt spreads this week, although people are saying that a lot of the widening has to do w/index rebalancings occurring as a result of Greece’s rating downgrade a few weeks back). The housing figures in the last couple weeks have all signaled that activity retrenched meaningfully following the expiration of the tax credit (although the homebuilder stocks seem to have found their footing in the last few days) while the labor market remains sluggish (the next big data point on this front will be next Fri’s BLS report).
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