The monthly price action was characterized by an initial push higher, only to find stiff resistance near SPX 950 preceeding a strong mid-month correction. Nevertheless, by month-end price had retraced half of that fall and implied options volatility was at nine-month lows. News flow featured new oil highs, a slew of successful Treasury auctions, improved factory order, construction, housing, income and jobs numbers, and yet reduced global growth forecasts and the highest unemployment rate in some 25 years with many western states exceeding the 10% level.
Sector-wise, Materials (XLB) and Energy (XLE) came back hard, even as Technology (XLK) continued to plow ahead and Heathcare (XLV) caught a second wind. Style-wise, Small-Cap Value (PWY) stocks were the only real bright spot. This powerful recovery rally has left Price/ Earnings ratios quite rich. As positive as the economic tea leaves appear, if jobs and earnings can't also show supportive signs this July, the bulls may find that they lost more than their analogue television reception last month.
Sentiment: Mostly Positive
Volatility: Declining (VIX 25-32)
The Style-Box was calculated using the following PowerShares™ ETFs: Small-Growth (PWT), Small-Value (PWY), Mid-Growth (PWJ), Mid-Value (PWP), Large-Growth (PWB), and Large-Value (PWV). The Sector-Ribbon was calculated using the following Select Sector SPDR™ ETFs: Materials (XLB), Industrials (XLI), Energy (XLE), Staples (XLP), Discretionary (XLY), Financials (XLF), Technology (XLK), and Healthcare (XLV). The Standard & Poors 500, Dow Jones Industrial Average and NASDAQ 100 may be traded through ETF proxies, including the SPY or IVV, DIA and QQQQ, respectively.